GAIL vetoes Mahanagar Gas expansion plans

Vol 6, PW 6 (22 May 02) Midstream & Downstream

GAIL has ordered Mahanagar Gas - its Mumbai-based 50-50 joint venture with British Gas - to shelve all its expansion plans and focus on consolidating its existing business.

A source tells PETROWATCH that GAIL gave these instructions to the board of Mahanagar Gas when it met in Mumbai on 10th and 11th May. Mahanagar Gas sells piped cooking gas to residential areas and CNG for vehicles in Mumbai.

Not satisfied with the growth of its Mumbai business, it drew up plans to set up a gas network in neighbouring Thane, Belapur and the Mumbai suburb of Dahisar, where it projected additional gas demand of 2m cm/d. But in stepped GAIL.

"We told them gas supplies from Mumbai High are dwindling so it is illogical to go in for an expansion of this type when one is not sure of getting even the existing quantity," reveals a source. "And now that the APM is being dismantled there is no certainty of the price at which gas will be available in the future so it makes no sense to go into new areas." Subdued, Mahanagar Gas has quietly shelved its expansion plans.

Instead GAIL has told its subsidiary to add more consumers in Mumbai. "Its present network in Mumbai can serve 300,000 customers," we learn.

"But the actual number of consumers is just a little more than 100,000. We have invested a lot of money in Mumbai but our network is under utilised."

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