IDFC to prepare report for AP Gas Grid Project

IDFC Private Equity, an asset management company (AMC) that manages infrastructure focused fund, will prepare a report outlining the basic framework for the Andhra Pradesh Gas Grid Project proposed under public-private partnership. A proposal to this effect was approved by the state government a week ago.

According to K V Rao, principal secretary, Infrastructure, Government of Andhra Pradesh, apart from identifying the feasible routes for laying trunk lines and other network for the supply of gas to both industrial and domestic sectors, the company has also been asked to suggest ways to create demand for gas in the state. The company is expected to submit its report in 3-4 months.

According to officials, the asset management company had approached the government to take part in the survey to enable the implementation of the gas grid project as it is also interested in infrastructure projects of this scale.

It recently announced its plans to raise $300 million as second round fund from both Indian and foreign investors to fund the projects. The company, in turn, is expected to rope in the services of a top consultancy firm such as KPMG and Crisil to undertake the study, officials said.

It may be recalled that the state government had recently announced its plans to set up a gas grid project to utilise the huge additional gas reserves to be available in the Krishna-Godavari basin from 2008 onwards. The government wants the first phase of the gas grid project to be ready by the time Reliance commences its production in the K-G basin in 2008.

The government is willing to join hands with both the public sector and private sector companies, including Reliance, Gujarat State Petroleum Corporation in this endeavour. GAIL has already expressed its keenness to participate in the project.

While the first response to the proposed project came from a public sector company through the Union petroleum ministry, the state government now appears to be more inclined towards private players including foreign companies.

"It would be better to bring in those strategic partners who will keep the interests of Andhra Pradesh in mind unlike some companies which are influenced by politicians from Bihar or Uttar Pradesh," an official attached to the chief minister's office observed.