Adanis' gas stations by June-end

Gujarat Adani Energy Ltd, the gas distribution arm of the Ahmedabad-based Adani group, is all set to market compressed natural gas (CNG) and piped natural gas (PNG) in Ahmedabad and Vadodara by the end of June.

The company, which is also looking for licenses to operate in cities outside Gujarat, will invest Rs 600 crore over the next five years on its gas distribution business.

Of this, Rs 325 crore will be spent only for establishing a PNG network to cater to the demand of the domestic market.

"With the Guajrat State Petronet Ltd (GSPL) pipeline reaching Gairatnagar, near Ramol, on the outskirts of Ahmedabad, we are now laying pipes to bring gas inside Ahmedabad city from the delivery point at Gairatnagar. We are setting up a city gas station near Ramol. We have already assigned the task of laying pipe line for gas distribution in Ahmedabad to a reputed company. The work on reaching CNG and PNG to major parts of Vadodara is in progress. We hope to commence gas services in both the cities by the end of June and the first week of July," said Sanjay Gupta, chief executive officer of Adani Group.

A marketing team is working on selling PNG connections in the domestic segment. Corporate sales of bulk CNG, targeted at various road transport corporations are on progress.

Adanis are targeting 50,000 PNG connections each year from both the domestic and commercial segments.

The company is also talking with the Ahmedabad Municipal Corporation and the Gujarat State Road Transport Corporation for selling CNG to its fleets. Sources said negotiations are at an advanced stage.

"The proposed CNG Act is expected to be finalised shortly. All the public buses plying in the state have to switch over to CNG. We are also eyeing selling CNG to inter-city buses plying between Ahmedabad and Vadodara. A gas-buying agreement has been signed with the Gujarat State Petroleum Corporation Ltd, a state government enterprise. This will ensure uninterrupted gas supply for our customers. We are looking at taking PNG to industrial customers, based in various Gujarat Industrial Development Corporation estates," he said.

Adanis have recently signed a gas purchase agreement with the Gujarat State petroleum Corporation Ltd.

It is still open for gas purchase at a lesser price from Shell Hazira Ltd and Petronet LNG Ltd.

"With the expansion of our marketing network, demand for gas also will move up. We may buy gas from companies like Shell, if the price offered is competitive," Gupta said.

In the first phase, two CNG stations will be put up in Ahmedabad city and two in Vadodara.

Adanis are now working on creating a CNG-PNG ring across the cities.

The company, which will invest Rs 600 crore over next five years in its gas distribution business, will spend Rs 325 crore in fiscal 2005-06 for PNG. The company will spend Rs 150 crore over the next two years on CNG distribution.

The rest of the amount will be spent during the second phase of expansion.

The company has recently achieved financial closure for these two projects.

Industrial Development Finance Corporation has sanctioned a Rs 174.50 crore loan to the company.

This includes a term loan of Rs 27.50 crore for the Vadodara project and another term loan of Rs 147 crore for the Ahmedabad project.

Company officials said this is an indicator of the confidence the financial institutions have in the project.