GAIL mulling purchase of Reliance gas pipeline

State-run gas transporter GAIL India Ltd is conducting due diligence on whether to bid for Reliance Gas Transport Infrastructure Ltd (RGTIL), a company belonging directly to Reliance Industries Ltd chairman Mukesh Ambani.

"Gas transmission is our core business. We are evaluating the opportunity and will take a decision at a suitable time," GAIL chairman and managing director B C Tripathi told reporters in New Delhi on Friday.

He said GAIL would bid for RGTIL only if there is a positive outcome of the due diligence process. "Our decision will be based on commercial, technical and legal due-diligence," he said.

RGTIL operates a 1,396-km east-west gas pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat. It was meant to transport natural gas from the Reliance-operated Krishna-Godavari fields off the Andhra Pradesh coast; but with output from K-G D6 plummeting, the pipeline has become largely redundant.

RGTIL was originally a subsidiary of Reliance Industries Ltd (RIL) incorporated in March 2003 to transport natural gas from the eastern offshore fields to consumption centres. Two years later, it was transferred to Mukesh Ambani.

It was expected at that time that Ambani may sell stake in the company through an initial public offering once RIL's eastern offshore KG-D6 field hits the expected peak volume of 80 million standard cubic metres per day.

However, the field has belied its early promises, and now produces less than 26 mmscmd. Thus Ambani now wants to sell the gas pipeline business outright.

Tripathi also said the Dabhol terminal for importing gas in ships, built some 15 years ago, is likely to be commissioned by the end of January. GAIL had imported a shipload of gas in March for commissioning the five million tonnes a year facility. But the operations had to be aborted midway after two successive equipment failures.