Expansion at Haryana City Gas despite GAIL snub

Vol 15, PW 18 (22 Mar 12) Midstream & Downstream

Sadly nobody except Haryana City Gas thinks its Gurgaon city gas network is hot property.

GAIL abandoned plans to buy the company in June last year because of the unrealistically high Rs800cr ($156m) asking price demanded by its promoters, SKN Bentex group, better known for manufacturing LPG cylinders and kitchen equipment. Other interested buyers like Lanco Infratech were similarly turned off.

Unfazed, Haryana City Gas continues to expand in and around Gurgaon, where it is selling nearly 110,000-kg/day of CNG from five CNG stations, a sharp increase over the 75,000-kg/day it was selling in May last year (2011). “Most demand is from privately-owned cars,” says a company source.

“More and more are switching to CNG.” No surprise, he adds, as CNG costs just Rs34/kg ($0.68) against a petrol price of Rs65/litre ($1.3).

Encouraged, Haryana City Gas wants to add five more CNG stations to its tally by the year-end. “We are halfway through the approval process to build the additional stations,” we learn.

“‘Long lead’ equipment has already been ordered.” Each of the five new stations is expected to sell 15,000-kg/day to local cars, auto-rickshaws and buses.

Haryana City Gas is also selling nearly 20,000 cm/d piped gas to 26 businesses in Gurgaon, including restaurants, shopping malls and hotels. Since May last year, the company has doubled the number of homes it supplies piped gas to from 1500 to 3000.

When contacted, a senior GAIL source confirms past interest in Haryana City Gas. “We regularly evaluate opportunities,” he said.

“But before we could decide whether we wanted to buy a stake in the company the talks fell through because of legal and financial reasons.”