BPCL, GAIL to set up gas distribution JV

State-run oil refining and marketing company Bharat Petroleum Corporation (BPCL) is set to float a joint venture with GAIL India for distribution of gas in Maharashtra, excluding Mumbai.

The company is to be registered under the name of Maharashtra Natural Gas (MNGL).

Both BPCL and GAIL are expected to hold 22.5 per cent stake in the company each, and 5 per cent of the stake would rest with the state government or its nominees.

A senior official at BPCL said the remaining 50 per cent was likely to be financed either through a financial institution or an initial public offer.

"We are first going to start distribution of gas to Pune alone, and subsequently supply to all major towns and cities in Maharashtra," he said adding that the gas would be distributed for domestic, commercial, industrial as well as transport purposes. The investment requirement for the project would be approximately Rs 1000 crore.

The project is likely to go on floor by late 2006, or early 2007, said the company executive.

Further, the Supreme Court, through a directive, proposed that Pune, being a growing polluted city, should be the destination for setting up the joint venture company, to distribute natural gas.

The demand for natural gas in Pune would be anywhere between one and two million cubic metres, according to studies conducted by Bharat Petroleum Corporation. This is comparable with the usage in Mumbai.

The company is looking to source gas from Dabhol, Dahej, Krishna Godavari Basin and Bombay High.

As per legal terms, MGNL will be able to supply gas to all centres in Maharashtra, except Mumbai, where the distribution is undertaken by Mahanagar Gas, which is a joint venture between GAIL and British Gas with a stake of 49.75 per cent each.