Adani and IndianOil target Allahabad gas market

Vol 18, PW 1 (28 Aug 14) Midstream & Downstream

Allahabad, birthplace of Bollywood superstar Amitabh Bachchan, will soon receive piped gas from IndianOil Adani Gas Pvt Ltd, with first gas sales expected to begin in the next six or seven months.

IOC and Adani won the retail gas licence in May 2013 for Allahabad in Uttar Pradesh and Punjab capital Chandigarh, best known for its master plan created by Swiss-French architect Le Corbusier. However a JV source admits the company is nowhere near meeting its first year target of laying 384-inch km of pipeline and connecting 25,000 households in Allahabad or laying 1400-inch km of pipeline to connect 50,000 homes in Chandigarh.

“About 70% of our time has been spent getting clearances,” we learn. “But pipeline laying work has now begun through our contractor Aneri Constructions.

” IOC-Adani is laying around 5-km of steel pipeline every month and should begin gas sales in Chandigarh next year. In February the JV secured project finance from a consortium of Indian state-owned banks.

“This is the first time in India any CGD company has got project finance on its own strength,” we hear. “Till now all were funded by promoters from their balance sheets.

” With SBI Caps as consultant, Allahabad Bank, Union Bank of India, Indian Bank, Corporation Bank and State Bank of Travancore have lent IOC-Adani Rs400cr ($67m) of the total project cost of Rs550cr ($92m) for five years. Adani and IOC will contribute the rest equally as equity.