27-04-09 Natural gas transmission and distribution company GAIL India has kept Rs 1,000 crore ready to start establishing city gas distribution projects along with its pipeline network, chairman and managing director U.D. Choubey said. "We don't have any shortage of money," Choubey said, adding, "GAIL Gas (GAIL's wholly-owned unit) has already proposed to lay city gas distribution projects in 230 cities across the country along with the company's transmission pipeline network."

City gas distribution projects usually entail investment of about Rs 300 crore per project until commissioning.
"We have also earmarked Rs 4,000 crore to be spent in laying city gas distribution projects in the country," Choubey said. However, the company cannot proceed with city gas distribution networks till it gets nod from the Petroleum and Natural Gas Regulatory Board.

The regulatory body has specified three categories for making application for laying city gas distribution networks. An interested company has to:
1) Either submit an expression of interest to start the project in a particular city, after which, the board decided whether to open that city for bidding at all.
2) It has to be a government-authorised agency seeking a licence from the board;
3) or it has to be a company already operating in a particular city approaching the board for regulation.

Choubey feels the regulator has done very little to help city gas projects take off.
"The development in establishing city gas projects happened before October 2007 only," Choubey said, adding hat the rate of development was very slow after that. The PNGRB came into existence only in October 2007.
GAIL started gas distribution projects in 17 cities, formed 8 joint venture companies and ramped up distribution to 3.5 mm cmpd of gas before the regulator came into existence, Choubey said.
"There has not been any new city gas project that has started after the establishment of the regulator," he said.

The PNGRB had earlier this month awardedrights to lay city gas distribution networks in Dewas (Madhya Pradesh), Kota (Rajasthan) and Sonepat (Haryana) to GAIL Gas after calling competitive bids to lay such networks in six cities.
The company plans to spend Rs 150 crore in the current fiscal year that began April 1 to start establishing networks in the three cities.