Vadodara Gas Company Ltd (VGCL), a city gas distribution (CGD) player joint promoted by Vadodara Municipal Corporation (VMC) and GAIL Gas Limited is looking to expand its consumer base by adding 200,000 domestic consumers over the next five years.
With the existing base of about 75,000 domestic gas consumers and about 2800 commercial units, VMC believes that the GAIL Gas JV would help expand the existing CGD network in Vadodara and add about 30 new CNG stations in the city over the next five years, a VMC official informed.
Currently, GAIL has six CNG stations across Vadodara city.
"The joint venture with GAIL India will help VMC to secure cheap and sustainable gas supply for its domestic and industrial consumers. There are over 450,000 households in Vadodara city. We believe that with GAIL JV, we will be able to cover about 70 per cent of these households in the next five years," said Shailesh Nayak, project engineer - gas, VMC.
GAIL Gas, fully-owned subsidiary of GAIL India, and VMSS (Vadodara Municipal Corporation) had signed a JV in August this year for CGD project in Vadodara at a combined enterprise value of Rs 215 crore.
It may be noted that it is considered to be one of the unique case of a local civic body forming a gas distribution company in partnership with a public sector gas company.
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Earlier, it was decided that GAIL Gas would hold 26 per cent equity in the JV, while 24 per cent would be controlled by VMC and for the remaining 50 per cent stake, a strategic partners and financial institutions would be roped in. However, later, both the companies decided to hold equal stake in the JV.
"The deal is through and VMC board has given its approval. Now, the GAIL board's approval is required to get the actual work to begin," said Rajeev Shah, MD of RBSA Advisors LLP. RBSA Advisors acted as an exclusive financial advisor to GAIL and VMSS for the joint venture.
"The work will begin once the project gets approval from GAIL India board and then from the Petroleum and Natural Gas Regulatory Board (PNGRB). We expect it to come in the next 4-5 months," informed the VMC official.
According to sources, valuation of GAIL Gas's gas assets in Vadodara valued at around Rs 107.8 crore, while that of VMC also stood at Rs 107.2 crore.