GAIL beats GSPC for tie-up with DMICDC

Vol 13, PW 25 (03 Jun 10) Midstream & Downstream

GSPC top-management must be green with envy.

Old rival GAIL has walked away with a tremendous gas transmission and distribution business opportunity that normally GSPC would take for granted. PETROWATCH learns GAIL is set to form a joint venture with the Delhi Mumbai Industrial Corridor Development Corporation (DMICDC) - the driving force behind a 1483-km long major infrastructure project passing through Gujarat.

“GAIL has finalised the joint venture draft,” confirms a source. “But board approval is pending.

” This proposed JV will source and supply gas to four proposed 1000-MW gas based power stations along the length of the corridor, two of which are planned for Gujarat. “GAIL will also set up city gas distribution networks in the corridor and supply piped gas connections to factories.

” Still, GAIL is not expecting GSPC to take this challenge lightly, especially given the huge presence across Gujarat of GSPC subsidiaries Gujarat Petronet and GSPC Gas. “GAIL will have to factor in GSPC whenever it proceeds with gas supply plans in the corridor,” we hear.

“The Petroleum and Natural Gas Regulatory Board will not allow duplication (of pipelines or infrastructure).” Separately, the Gujarat state government has confirmed it will take a 26% equity stake in each of two proposed gas-based power projects in Gujarat proposed for the DMICDC corridor.

One 1000-MW power station is planned at Vaghel in Patan district; the other is planned at Chokari in Vadodara district. “We have conveyed our willingness to pick up the stakes,” confirms a source.

“There are two options: either the Gujarat government participates directly, or through one of its companies.” Most probably Gujarat government-owned Gujarat Power Corporation will acquire the stakes.

“Here, the state government’s role will be limited to that of a facilitator,” we hear. “GAIL and DMICDC will supply the 8m cm/d of gas needed for these power stations.