Andhra govt to reduce stake in KGGNL

The Andhra Pradesh government would confine its stake to 11 per cent in the Krishna Godavari Gas Network Limited (KGGNL) to enable Reliance Industries Limited (RIL) to hold a majority equity in the special purpose vehicle, which was created to set up a gas grid and city gas network in the state.

Currently, the Andhra Pradesh government and the Gujarat State Petroleum Corporation Limited(GSPC) hold 26 per cent stake while the remaining 48 per cent equity is held by IDFC Private Equity.

DV Somayajulu, economic advisor to the Andhra Pradesh government, who is negotiating with RIL officials on behalf of the state government, said that the company was willing to jointly execute the city gas network in 43 cities and towns, provided it had the majority stake in KGGNL.

"The chief minister has already stated that the government has only to play an enabling role in this regard. With RIL being the sole gas producer in the KG Basin for the next 4-5 years, we wanted the company to join KGGNL," he told Business Standard.

Somayajulu also pointed out that the regulatory board, appointed by the Government of India, has no powers to direct the gas producer to supply gas to a particular city gas network.

If the gas producer is not being made the partner in city gas network, there is no point in executing the project in this situation, he said.

The company in the past had proposed to set up its own city gas network, covering 32 cities and towns in the state.