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BG plugs in to power sector via novel model

March 05, 2004 11:33 IST

The BG Group is foraying into power sector through its subsidiary Gujarat Gas Company. The company is working on a co-operative model to enter the power sector in the country -- the first such attempt in the power sector.

B S Shantharaju, managing director of Gujarat Gas company, told Business Standard: "We are looking at setting up power projects. We have a strong knowledge of customers and their requirements. We are looking at a co-operative model of supplying power".

Explaining the co-operative model, Shantharaju said, "Customer of power come together to form a co-operative and get power from the power plant and supply excess, if any, to others. The customers will have some equity in the power project. Our role is to supply gas and take care of operations.

"We will have majority holding in the power project. We will also ensure a power purchase agreement is in place and also there is a secured supply of power".

Initially, the company is exploring a power plant of 100 mw, which can later be scaled up.

Shantharaju pointed out that the company has already commissioned a study "a primary research to understand the requirement of the power", which will be submitted in a couple of weeks.

The BG Group has already identified India as one of the six core countries and is seen as a "long-term prospect".

Till date it has invested over $500 million and plans to invest an additional $500 million over the next 3-5 years. BG group owns 65 per cent in Gujarat Gas Company.

The BG group's decision to enter the power sector in the country has been prompted by the passage of the Electricity Act 2003 under which power generation has been delicensed and over a period of time allow producers to sell electricity directly to the customers.

On its expansion plans, Shantharaju said that the company was working on three-pronged strategy -expanding network capacity, newer gas applications including increasing presence in compressed natural gas and tapping business opportunities in other states across the country.

Elaborating on the new gas applications, Shantharaju pointed out that the company was looking at gas as an additional application in weaving as well as texturising besides application for diamond cutting. The company is also tapping the chemical and pharmaceutical companies in Gujarat.

Gujarat Gas is also investing around Rs 55 crore (Rs 550 million) in CNG stations. "In the next two years the company intends to set up 27 CNG stations in Gujarat", he added.

GGCL distributes gas in and around three cities in South Gujarat -- Surat, Bharuch, Ankleshwar & Jhagadia. It supplies approximately 2.2 million cubic metres of gas per day to 150,000 customers.
Hemangi Balse in Mumbai