Reliance threat forces Vadodara into arms of GSPC

Vol 12, PW 20 (12 Mar 09) Midstream & Downstream

Old and ambitious, the Vadodara Municipal Corporation (VMC) wants to expand operations and has approached two state-owned companies for help against the threat of competition from Reliance Industries.

PETROWATCH learns VMC, the country’s oldest gas retailer, is talking to GAIL and Gujarat government-owned GSPC Gas on a possible partnership that would add another 330,000 new connections in Gujarat within the next decade. “We have good infrastructure in place,â€‌ Balkrishna Shukla, the mayor of Vadodara who has an advisory role in the company, tells us.

“But we don’t have the muscle to take the network to the next stage.â€‌ VMC supplies 100,000 cm/d to around 71,500 households and 2500 restaurants and other commercial establishments in Vadodara.

But it wants to expand operations through a joint venture with either GAIL or GSPC Gas. “In the past few months GAIL and GSPC Gas have held several rounds of talks with us on this partnership idea,â€‌ adds Shukla.

“But ultimately it is the (Gujarat state) government who will decide the right partner.â€‌ In Gandhinagar, well-placed sources tell us that decision has already been made and the partner for VMC will be GSPC Gas.

Most of VMC’s gas reaches the city through a 176-km pipeline from Hazira – the first stretch of the GAIL-owned 2800-km-long HBJ pipeline. GAIL also supplies several industries in and around Vadodara through the HBJ while Adani Energy supplies 30,000 cm/d to 40 industrial consumers in the Nandesari belt of the city, known for its Banyan trees.

VMC’s expansion plan was provoked on June 5 last year when Reliance submitted its Expression of Interest (EoI) to the gas and downstream regulator to set up a gas network in Vadodara. Later that month VMC responded with its own EoI, to counter the Reliance threat.

But it’s not clear how the regulator will respond because VMC is not registered under the Companies Act, 1956 - a must before it can secure formal authorisation.