GAIL India is going to invest Rs 550 crore (Rs 5.50 billion) in the proposed Blue Sky project which seeks to set up a gas distribution network across Kanpur, Agra, Lucknow, Faridabad and Pune.
The project is going to be implemented within three to four years, the company disclosed in its filing with Sebi ahead of its public offer in March.
The company intends to expand retail marketing and distribution of gas in these cities by constructing new pipeline networks and infrastructure for dispensing compressed natural gas.
It will then pipe the gas directly to industries, hotels, homes and CNG stations. GAIL is also looking at involvement of multinational companies in implementing the Blue Sky project.
Chairman Proshanto Banerjee had gone on record saying the company proposed to Iffco of Iran and Shell to participate in the project.
Experts feel, Blue Sky was a natural extension for GAIL which successfully runs city gas distribution companies in Delhi and Mumbai through Indraprastha Gas Ltd and Mahanagar Gas Ltd, respectively.
In IGL, which recently went public, GAIL teamed up with Bharat Petroleum Corporation Ltd and government of Delhi whereas in MGL, Gail has British Gas as partner.
Apart from that the company has recently formed a joint venture with Hindustan Petroleum Corporation Ltd and Kakinada Sea Ports Ltd for distributing and marketing CNG, piped natural gas, gas and auto LPG and other gaseous fuels for domestic, commercial, industrial and automotive use in Andhra Pradesh.
Moreover, the company was also looking at similar projects abroad.
The company has also completed a due diligence for acquiring controlling stake in Greater Calcutta Gas Supply Corporation. With the discovery of gas filed in Myanmar, where GAIL has a stake, it could be possible to bring gas in the eastern India.
Experts feel GAIL has to step up its activity given that Reliance has expressed interest in getting into city gas distribution.
Interestingly, in implementing all the city gas distribution projects, GAIL will mainly have to rely on exploration and production companies such as ONGC and Reliance for gas.
