Bhagyanagar Gas Limited (BGL), a joint venture company between public sector companies Gail and HPCL, has firmed up plans to execute a Rs 260-crore project for setting up CNG stations and piped gas supply networks in Hyderabad and Vijayawada. |
The Andhra Pradesh Industrial Development Corporation (APIDC) has been offered a five per cent equity stake in the project for Rs 5 crore. |
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Drawn on the lines of the successful projects like the Indraprastha Gas project in Delhi and Mahanagar Gas in Mumbai, the project for which financial closure is yet to be achieved, is expected to be completed in a period of three years, from the time of commencement. |
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"Right now we are arranging Rs 1 crore towards equity from our own resources and the remaining Rs 4 crore will be given in due course with or without the financial support of the state government," P Nageshwar Rao, managing director of the Andhra Pradesh Industrial Development Corporation (APIDC), told Business Standard. |
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Besides the environmental advantage, these alternate fuels are also considered as consumer friendly. The auto LPG is estimated to be 30 per cent cheaper, while CNG is likely to be almost 50 per cent cheaper when compared to petrol. |
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And the piped gas is expected to cost the consumer only Rs 80 as compared to the price for a standard LPG cylinder, which is over Rs 300. |
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"We are planning to keep all the infrastructure, including the laying of local pipeline networks ready by the time the additional gas is available from the latter part of 2007," C N Trivedi, managing director of Bhagyanagar Gas Ltd, told Business Standard. |
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The laying of a pipeline network in the twin cities will commence from this year-end, he said. |
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Alongside, the company will also set up gas stations and terminals to cater to the fuel needs of autorickshaws and buses, which are the two major contributors to pollution in the city. These facilities will be extended by the company to other places in the state in the future, according to the BGL managing director. |
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Out of the Rs 100-crore equity proposed in the project, GAIL and HPCL will hold 22.5 per cent each, APIDC will have a five per cent stake, while the remaining 50 per cent equity is expected to be provided by private strategic partners and financial institutions. |
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Says M Srinivas, president of the Kakinada Seaports Private Ltd (KSPL), which expects to have an equity in the project, "Though as a co-promoter of BGL, KSPL has the option of taking the equity on par with that of the two joint venture partners, the promoters however are considering a 10 per cent stake. Ours would be strategic participation as a prospective logistic supporter." |
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The ultimate decision on the exact percentage of equity participation by KSPL, according to Srinivas, would depend on the business plan, which will be approved by the boards of both the public sector entities. |
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Institutions like IDFC, are also expected to take equity in the project. |
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"Vijayawada has been taken up as a seed project (which will come up first) for which 0.1 MMSCMD of gas has already been allocated by the Ministry of Petroleum," Trivedi said. |
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BGL is planning to set up four CNG outlets in Vijayawada for which Gail is in the process of laying a pipeline from Kondapally (Gail already has a pipeline to this point to supply gas to the privately owned Lanco Kondapally gas power plant) to Vijayawada. |
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BGL is already in talks with the Andhra Pradesh Road Transport Corporation (APSRTC), which owns over 19,000 buses, about 2,500 of them plying along in the twin cities, for the conversion of engines to work on CNG fuel. |
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BGL is planning to set up about 20 CNG dispensing high volume stations, 13 of them at the 13 bus-depots of the APSRTC in Hyderabad. The city's requirement for both the auto-fuel and household supply is estimated at 0.6 MMSCMD. BGL has already spent over Rs 9 crore on the outlets. |
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Of the Rs 260 crore estimated project cost, BGL's business plan envisages a Rs 57 crore investment in Vijayawada and Rs 196 crore investment for the proposed facilities in the twin cities of Hyderabad and Secunderabad. |
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"The project has a good business potential because it will be easily extended to other places enroute the gas pipeline that was proposed to be laid to Gujarat from Kakinada via Hyderabad. It also has the government's support, which will see transport agencies like APSRTC joining the bandwagon," Srinivas pointed out. |
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In the pipeline |
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- GAIL & HPCL to hold 22.5% each in the Rs 100-crore equity proposed in the project
- APIDC offered 5% stake in the project
- Project likely to be completed in a period of three years
- Piped gas likely to cost consumer only Rs 80, when compared to a standard LPG cylinder that costs more than Rs 300
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