Andhra ropes in RIL to fast-track gas distribution project

11 November 2008

Krishna Godavari Gas Network Ltd (KGGNL) has restructured its equity structure to include Reliance Gas Corporation Ltd (RGCL) as a major stakeholder. Reliance Gas has been roped in to ensure faster delivery of gas to the city gas distribution network (CGD).

RGCL, a subsidiary of Mukesh Ambani-led Reliance Industries, will hold a 67 per cent stake in KGGNL, which will develop a natural gas distribution network in Andhra Pradesh.

KGGNL will start supplying natural gas to consumers through pipelines in Andhra Pradesh by December this year.

Prior to the restructuring, state government entity Incap and Gujarat State Petroleum Corporation (GSPC) had 26 per cent stake each in KGGNL with the balance 48 per cent being held by private equity fund IDFC.

The Andhra Pradesh government decided to rope in RIL as the new consortium partner since GSPC would not be able to supply natural gas till 2011-12. In the equity re-structuring process, the state government has cut the equity holding of Incap, GSPC and IDFC to 11 per cent each.

Once the new structure is in place, KGGNL will submit bids to the Petroleum and Natural Gas Regulatory Board (PNGRB) for laying a gas grid in state.