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Mr Proshanto Banerjee (right), CMD, GAIL (India), with Mr J.K. Jain, Director Finance, at a press conference in the Capital on Monday. - Kamal Narang

New Delhi , Nov. 3

GAIL (India) Ltd has begun its journey towards separating gas trading business from its core business, gas transmission.

The process is expected to be completed, and a separate company for gas trading created, by 2008, when the Rs 20,000-crore national gas pipeline grid will be set up.

"For GAIL to become a national gas transmission company and develop confidence of producers and users, we plan to separate the trading business by creating a Chinese wall between transmission and marketing functions," the GAIL (India) Chairman and Managing Director, Mr Proshanto Banerjee, told newspersons here on Monday.

This year, the accounts for the gas trading business were separated from that of other businesses. The next stage will be the creation of a strategic business unit and finally a separate corporate entity that will be listed on major bourses.

The new entity will undertake transactions involving gas purchase from producers and importers (LNG) and sale to consumers. Meanwhile, GAIL (India) will retain all other businesses such as LPG production (15 per cent of the country's demand), petrochemicals besides the core business of gas transportation.

Elaborating on the proposed gas grid, the GAIL Executive Director (Business Development), Mr Rajeev Khanna, said the only Government approval, Right of Use (RoU) for the 7,900-km National Gas Grid, would be completed by June 2004.

``We are talking to all producers (of gas) and importers of natural gas/LNG which include Shell, British Gas, Reliance and Cairn Energy for transporting their gas/LNG through our network. We have reached some degree of analogy with Shell for transporting LNG it would import at Hazira to markets in Maharashtra through the Dahej-Uran pipeline,'' Mr Banerjee said.

On the expansion plans in the CNG business, he said, "The company proposes to take Shell, Botas of Turkey and IFCO of Iran as strategic partners in executing city gas projects in Agra, Faridabad, Kanpur, Lucknow, Pune, Bareilly, Vijayawada, Secunderabad and Hyderabad." CNG service is expected to commence in Kanpur, Lucknow, Agra and Bareilly in mid-2004.

On the exploration front, GAIL plans to double its investment in business to Rs 254 crore in 2004-05.

GAIL currently holds interest in 10 exploration blocks. It is in talks with Royal Dutch/Shell to acquire a 15 per cent stake in an offshore medium-sized gas field in Egypt.

In the gas distribution business, GAIL is planning to acquire equity stakes in two city gas distribution projects in Egypt.

"Shell has offered us 19 per cent equity in Fayum gas company and 10 per cent equity in Shell CNG company (both in Egypt). Financial, legal and technical due diligence study for both have been completed and valuation and other terms and conditions for investment are under preparation," he said.

GAIL is also evaluating the feasibility of participation in another gas distribution company in Egypt, Natgas, Mr Banerjee said.

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