The Hindu Business Line : HPCL, GAIL form venture to sell eco-fuels in AP

HINDUSTAN Petroleum Corporation Ltd (HPCL) and Gas Authority of India Ltd (GAIL) have signed an agreement to form a joint venture company - Bhagyanagar Gas Ltd - to distribute and market environment-friendly fuels in and around the cities of Andhra Pradesh.

HPCL and GAIL will invest 22.5 per cent strategic equity in the venture. The Andhra Pradesh Government will have an option to subscribe to five per cent of the equity. The remaining 50 per cent equity capital shall be offered to financial institutions, strategic investors, etc.

Mr M.B. Lal, Chairman and Managing Director, HPCL, and Mr Proshanto Banerjee, Chairman and Managing Director of GAIL, and senior officials of the two companies signed the agreement in New Delhi on Friday.

The joint venture company proposes to distribute and market natural gas, compressed natural gas (CNG), piped gas and auto LPG (liquefied petroleum gas), for use in residential, commercial, industrial and automotive sectors.

The entire project with an investment outlay of Rs 700-1,000 crore over the next 7-8 years would develop the required infrastructure, lay, operate and maintain its own pipeline by taking tap off/custody transfer from existing and future natural gas/pipelines of GAIL, set up retail outlets for auto LPG/CNG, etc., according to an HPCL press release here.

HPCL would provide the required marketing/distribution expertise and assist in working out strategies for increasing the usage of environment-friendly gaseous fuels in AP. It would also provide the technical expertise for marketing of Auto LPG.

GAIL, on the other hand, will provide technical expertise in the construction, operation and implementation of CNG and piped natural gas distribution system. To start with HPCL and GAIL have completed feasibility for setting up auto LPG stations, which envisages putting up 34 stations over the next five years in various cities of AP. The first two stations would be commissioned in Hyderabad and Tirupati shortly.

According to the CMD of HPCL, Mr M.B. Lal, "Andhra Pradesh accounts for a significant share of the company's investments. We operate a 7.5 mmt capacity refinery at Visakhapatnam and a 571-km-long cross-country petroleum product pipeline with an investment of Rs 850 crore from Visakhapatnam to Secunderabad along with associated terminals and despatch facilities.

Mr Proshantho Banerjee, CMD of GAIL said by the end of 2002, the company would be operating around 850 km of pipeline with a total investment of Rs 900 crore in AP.

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