Gujarat Gas and GSPC end feud for Vapi control

Vol 15, PW 22 (17 May 12) Midstream & Downstream

Vapi has long been a sore point for Gujarat Gas, which never forgave state-owned GSPC Gas for bullying it out of the heavily industrialised Gujarat town five years ago.

The good news is that India’s two largest CGD operators have buried their feud, a good sign for BG’s sale of its 65.12% stake in Gujarat Gas to a GSPC-led consortium. Last month (April) the two companies signed an Asset Exchange Agreement (AEA) for Vapi and the south Gujarat district of Bharuch, where Gujarat Gas dominates.

A formal announcement was made on April 26. Under the deal, Gujarat Gas will transfer ownership of its 25-km unused Vapi steel gas pipeline to GSPC Gas.

In return, GSPC Gas will gift its four CNG stations in Bharuch to Gujarat Gas. “It’s a win-win,” says Gujarat Gas, using a well-worn cliché.

“Bharuch is strategic for us and Vapi is important for them.” Moves towards the deal began in 2008 when then PNGRB chairman Labanyendu Mansingh told the two estranged gas retailers to sort out their differences over tea and ‘bhajiyas’ (onion fritters) without interference from the Board.

Eight years ago Gujarat Gas was the first company to set up a gas pipeline network to supply Vapi’s chemical factories after winning ‘non-exclusive’ authorisation from the state government. GSPC Gas, established in 2006, grew jealous and began setting up its own gas grid to tap the town’s impressive 5m cm/d demand.

Gujarat Gas had no choice but to withdraw. Vapi is near the Daman Ganga River in southern Gujarat and was listed by Time magazine in 2007 as one of the world’s worst polluted areas.

Gujarat Gas will remain free to bid for the town if offered in an upcoming CGD licensing round.