Centrica-inspired Torrent bid for Gujarat Gas
Two years ago Torrent Group chairman Sudhir Mehta categorically told this report he had no intention of entering the gas retail business.
So how to explain Torrent’s non-binding bid submitted to British Gas on January 10 to acquire its 65.12% stake in gas retailer Gujarat Gas Torrent, it seems, wants to replicate the business model followed by UK-based Centrica, set up in 1997 after a demerger from the BG Group that owns Gujarat Gas. Centrica today sells gas and electricity to more than 15.7 million factories, businesses and households in Britain.
“Torrent wants to become the first power company in India to follow this model of supplying both electricity and gas simultaneously,” we hear. Especially important for the Ahmedabad-based power producer is south Gujarat, where Gujarat Gas sells more than 3.5m cm/d of gas to at least 340,000 factories, businesses and households in Surat, Bharuch and Ankleshwar.
Torrent has two large gas-fired power projects in south Gujarat: the 1147.5-MW Sugen power station 22-km northeast of Surat, and the upcoming 1200-MW DGEN station at Dahej near Bharuch. From Sugen, Torrent sells 3.03bn units of electricity every year to over 520,000 customers within a 52-sq km area of Surat, Gujarat’s second largest city with nearly 4.5 million people.
Most of Torrent’s customer base overlaps with Gujarat Gas, as the same households or businesses which buy electricity from Torrent buy gas from the BG subsidiary. Torrent, we are told, believes it can profit by combining gas and electricity distribution businesses because of the resulting ‘synergy’ in shared infrastructure and overheads.
Take gas or electricity meter readings. A single Torrent employee could read both the power and gas meters at a customer’s premises, saving time and money.
