BG Energy plans $420 mn gas grid

UK-based energy major BG Energy Holdings plans to set up a natural gas transmission and distribution network in India on its own, involving an investment of $270-420 million, through three fully owned ventures.

Of the envisaged investment, it is committing $120 million as equity. For the new network, BG Energy Holdings will set up subsidiaries in the south Indian states of Andhra Pradesh, Karnataka and Tamil Nadu.

The company has already invested $800 million in India through its two gas joint ventures, the Panna-Mukta-Tapti exploration venture, and a wholly owned subsidiary.

Of the two gas joint ventures, the first is the Gujarat Gas Company, in which BG Energy holds 65.12 per cent equity, for the natural gas distribution business in Gujarat. The remaining equity in this venture is held by financial institutions.

The company also has 49.75 per cent holding in Mahanagar Gas - a joint venture with Gail (India) and the Maharashtra government for gas distribution in Mumbai and Greater Mumbai.

In Mahanagar Gas, Gail holds 49.75 per cent equity, while the Maharashtra government has 0.5 per cent equity.

As per its latest project proposal, BG Energy Holdings will set up fully owned subsidiaries, which will develop a gas distribution and transmission network to supply natural gas to domestic, commercial and industrial customers.

It will also distribute compressed natural gas for automobiles.

In case of its venture in Andhra Pradesh, BG Energy Holdings will source natural gas from gas fields on the east coast of India or from liquefied natural gas terminals planned across the west and east coast of the country.

Present government policy permits 100 per cent foreign direct investment in the oil and natural gas sector.

In case of the oil and natural gas trading and marketing business, companies have to divest up to 26 per cent to Indian partners or the public within five years.

BG Energy Holdings also has a 30 per cent stake in the Panna-Mukta-Tapti exploration and production project.

The UK-based energy major further has a 100-per-cent-owned subsidiary in India called British Gas India Private Limited to oversee its business in the country.