Waiting for Reliance to begin work on AP gas grid

Vol 13, PW 6 (27 Aug 09) People & Policy

Reliance has taken on a big responsibility in Andhra Pradesh and the state government is watching to see if it can deliver.

By offering 67% and a controlling stake in Krishna Godavari Gas Network (KGGNL) Ltd, a new pipeline company, state authorities hope Reliance can replicate Gujarat’s successful 2200-km gas grid with an equally ambitious 2000-km transmission pipeline network in Andhra Pradesh, connecting major demand centres in Vizag, Kakinada, Vijayawada and the state capital Hyderabad, with up to 1500 stations selling CNG along the route. “Wherever there’s a pipeline we want to see CNG stations,â€‌ says a government official, “like in Gujarat.

â€‌ But the omens don’t look good. Reliance should have signed an agreement on August 11 establishing the new company with partners GSPC (11%), IDFC (11%) and state government owned Infrastructure Corporation of Andhra Pradesh (11%), but the event was inexplicably cancelled raising fears the idea might die.

PETROWATCH later heard that Reliance petroleum president PMS Prasad was indeed in Hyderabad on the scheduled date but told state authorities it was â€کAshtami’ (inauspicious) and requested a postponement! “Signing the agreement is only a formality,â€‌ we hear. “There’s no need for Reliance even to come and sign.

All the parties have agreed at cabinet and board level.â€‌ Ever superstitious, this won’t be the first time Reliance has postponed a major oil and gas initiative because of an inconvenient alignment of the stars! Many remember how D6 gas production was delayed until the personal astrologer of Reliance chairman Mukesh Ambani gave his green signal.

Despite this, Andhra officials are happy they have convinced Reliance to take a controlling stake, confident it can do better than GAIL, which it accuses of ignoring the state, despite a proliferation of small onland gasfields in the Krishna Godavari Basin. “GAIL took its own sweet time laying pipelines in Andhra,â€‌ we hear.

“We offered Reliance 100% but they were happy with 67%.â€‌