Sinking in debt Gujarat Gas pledges Rs2674cr

Vol 19, PW 22 (14 Jul 16) People & Policy
     

Even with its formidable reputation, the huge bank guarantees Gujarat Gas has offered to win six geographical areas under CGD-VI will be of concern.

PETROWATCH learns the BSE-listed GSPC subsidiary has significantly increased its financial risks by giving bank guarantees totalling Rs2674cr ($402m) to the PNGRB gas regulator after winning six areas within just 39 days. Most recently Gujarat Gas won Anand and Panchmahals on July 4 for which it submitted a combined Rs662cr ($100m) guarantee.

Earlier it won Dahod on June 27 for which it submitted a guarantee of Rs52cr ($7.7m), Ahmedabad district on June 22 for which it submitted a guarantee of Rs1012cr ($152m), Dahej-Vagra on June 6 for which it committed Rs904cr ($136m) and Amreli district on May 27 for which it committed Rs44cr ($6.5m). These were among 34 areas offered under the sixth round, launched on October 1, 2015.

"Winning authorisation by submitting such high bank guarantees is the new normal," says an Ahmedabad-based consultant. "But if Gujarat Gas doesn't meet its minimum work programme target it will lose a lot of money." He adds Gujarat Gas will find work challenging in Amreli, Panchmahals and Dahod as these lie in Gujarat's underdeveloped eastern tribal belt.

And in Ahmedabad district the company can expect a legal challenge from Adani which already has a gas network in Ahmedabad city spilling into Changodar and Sanand.