GAIL may acquire 50% stake in AP Gas Distribution Corp

Country's largest gas transmission and marketing company Gas Authority of India (GAIL) may acquire 50% stake in Andhra Pradesh Gas Distribution Corporation (APGDC), a wholly-owned subsidiary of AP Gas Infrastructure Corporation.

If the move is successful, APGIC which was set up with an intention to create gas transportation infrastructure, will be eligible to participate in the bids for creating gas distribution networks in the country, a senior AP government official today said.

While Andhra Pradesh Industrial Infrastructure Corporation Ltd (APIIC) holds 51% in APGDC, AP Power Generation Corporation (AP Genco) owns remaining 49%.

According to the Petroleum & Natural Gas Regulatory Board rules, the companies which are bidding for the city's gas distribution network contracts should have experience of laying at least 300 km of gas network or should have three engineers on payrolls who participated in creation of similar network.

"An MoU is expected to be signed before this month-end. The total paid up capital of APGDC is Rs 10 crore. There may be some premium also for the stake," the official said.

However it is not clear that GAIL will also pick up stake in another APGIC subsidiary entity AP Gas Trading Company, which was set up for sourcing gas from domestic and overseas companies and supply it to the regional grid.

GAIL also owns 50% in Bhagyanagar Gas, another AP-based city gas distribution firm, in which Hindustan Petroleum Corporation Ltd (HPCL) holds the balance 50% equity.

GAIL has already entered into tie-ups with state entities in Karnataka and Kerala for city gas distribution and is said to be in talks with entities in various states, including Rajasthan, Maharashtra and Tamil Nadu.

APGIC has recently submitted its expression of interest (EoI) to PNGRB to build a pipeline from Kakinada to Srikakulam, which was part of the 1,100-km
Kakinada-Basudebpur-Howrah pipeline.