Haldia impact: GAIL not to buy Kolkata gas supply firm

Gail (India) Ltd has dumped plans of immediately entering the gas supply market in the city and its suburbs by refusing to buy out the state government-owned company, Greater Calcutta Gas Supply Corporation Ltd (GCGSCL), which owns the underground gas pipelines across Kolkata.

Gail said GCGSCL's net worth had turned negative.

Gail had evinced interest in the century-old company which has exclusive right of way for gas pipeline to develop a city gas distribution system on the lines of Delhi and Mumbai.

It carried out a financial and technical due diligence on GCGSCL. Gail went ahead with the study even though natural gas was not available in the region.

Proshanto Banerjee, chairman and managing director of Gail, has confirmed the company's decision not to acquire GCGSCL.

"It is found that the company's net worth has turned negative. There cannot be any value addition to Gail through acquisition of such a company," Banerjee told Business Standard.

Sources familiar with the development, however, pointed out that Gail's interest in the region and GCGSCL, had abated after the state government backed out of its promise to offer a stake in Haldia Petrochemicals Ltd (HPL).

The state government, which is the owner of GCGSCL and also a promoter of HPL, recently went along with the decision of the Union ministry of petroleum and natural gas and inducted Indian Oil Corporation into HPL, elbowing out Gail.

"Gail was looking for a comprehensive package of investment in the east, which included HPL, a synthetic rubber plant and GCGSCL. With HPL going to IOC, Gail seems to have lost interest," sources commented.

The state government is still in the dark about the GCGSCL development.

Sabyasachi Sen, industry secretary of the state, said the government was still awaiting a response from Gail on GCGSCL.

"The state wants Gail to come in. The negative net worth is an issue but that can be sorted out," Sen said.

Gail will be going ahead with its plan to connect Jagdishpur in Uttar Pradesh to Haldia in West Bengal through a gas pipeline at a cost of about Rs 4,000 crore.

It will undertake the modular expansion of Petronet LNG in Gujarat to feed the HBJ (Hazira-Bijapur-Jagdishpur) pipeline for west and north markets.

To jointly bid for Syria-Lebanon pipeline: CRISIL MarketWire adds: GAIL (India) plans to make a joint bid with Egypt's National Gas Co for the operations and maintenance contract of a gas transmission pipeline from Syria to Lebanon, a senior GAIL official said Thursday.

"Natgas has approached us to jointly bid for the contract and we are keen on the project," the official said. "The proposal has been sent to the petroleum ministry and its clearance is awaited," he added.

The 64-kilometre, 24-inch pipeline, also called the GASYLE I, will transport natural gas from Syrian Petroleum Co's Baniyas plant in Syria to the Beddawi power plant in northern Lebanon.

About half the pipeline will be in Lebanon, while the other half will be in Syria.

The pipeline is expected to transmit 1.5 million metric standard cubic meters per day of gas to the power plant.

The Lebanese Ministry of Energy and Water has invited bids for appointing an operations and maintenance contractor. The last date for the submission of bids is December 17.

GAIL (India) holds 15 per cent equity in NatGas, which is the largest private local distribution company for natural gas in Egypt. GAIL bought the stake in August for $19 million.