Mahanagar Gas wants control of CGD in Pune

Vol 7, PW 23 (11 Feb 04) Midstream & Downstream

Mumbai-based Mahanagar Gas is challenging plans by its parent company GAIL and oil major Bharat Petroleum to set up a gas distribution network in Pune.

MGL claims that it has the right to replicate the CGD network it pioneered in Mumbai in neighbouring Pune. Pune is a natural extension of our gas distribution profile, MGL tells PETROWATCH.

Last month, MGL made a detailed representation to the oil ministry arguing that it is competent to set up a CGD network in Pune district. Yet its unclear if oil secretary BK Chaturvedi was convinced.

Chaturvedi is on record as previously saying that GAIL and Bharat Petroleum should set up a separate company for Pune. We strongly feel that we can convince the ministry that there is no need to set up a separate company for Pune, says MGL.

We are fully capable of doing the job. MGL might succeed as GAIL and BPCL are in dispute over who should lead the project in Pune.

BPCL wants to replicate the Indraprastha Gas model for Delhi where it has joint operational control with GAIL - and set up a new company. But GAIL wants a model where it is in-charge of decision-making at Pune and BPCL retains a non-operational 20% stake.

Separately, MGL has commissioned the Indian Market Research Bureau (IMRB) to carry out a gas demand survey of Pune and the adjoining areas of Pimpri and Chinchwad. We want to be fully prepared, adds a source.

We cant rule out the possibility of a last minute call from the ministry. In private, MGL fears that BPCL will begin work in Pune without consulting either itself or GAIL.

BPCL is influential and has lobbied very hard for Pune. MGLs estimate of gas demand in Pune, Pimpri and Chinchwad mirror the findings of BPCL, which has set aside Rs600cr ($130.4m) for a CGD network.

BPCL plans a 3,500-km pipeline network and estimates 100 industrial customers, 1,700 commercial customers and 320,000 domestic consumers.