The country's largest private sector company, Reliance Industries, and Gas Authority of India, the country's largest transporter and marketer of gas, have decided to lay the national gas grid jointly. So far, the estimated investment in the project is Rs 53,000 crore (Rs 530 billion).

The government had earlier given GAIL the go-ahead to lay the national gas grid. The gas utility had then worked out an investment of Rs 20,000 crore (Rs 200 billion) over five years to lay 7,890 km of pipelines as part of the gas grid.

RIL had shown interest in building the gas grid, planned along the same lines of the power grid, which provides electricity to consumers across the country.

Last week, the petroleum ministry approved an investment of Rs 18,000 crore (Rs 180 billion) by GAIL to add 5,000 km to its existing 6,000 km of gas pipelines.

"This approval is not part of the original plan of the national gas grid," a senior GAIL official said.  "For the gas grid, it's now basically us and Reliance."

The two companies recently also signed an agreement to pump Reliance's gas from the Krishna-Godavari basin into GAIL's pipelines. These pipelines would connect to RIL's planned pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat.

Reliance is planning two other pipelines from Kakinada, the land fall point of the K-G basin gas. One pipeline would go to Chennai and the other to West Bengal.

 "The original plan was to take the Bengal pipeline up to Haldia. But now that GAIL is laying a pipeline from Jagdishpur to Haldia, we will terminate the pipeline in Kolkata and connect it to GAIL's pipeline in Haldia," a Reliance official said.

Reliance has also entered into an agreement with Gujarat State Petroleum Corporation to transport its gas from the K-G basin through its pipeline to Bharuch.

"Reliance and GAIL will jointly implement the gas grid. Smaller players such as GSPC will lay local pipelines," an official in the petroleum ministry said. Industry watchers say that with GAIL and Reliance agreeing on gas transportation, the government-owned company will be able to increase its transmission revenues. GAIL currently uses only about 62 per cent of its total pipeline capacity of 140 million cubic metres per day (mscmd).

GAIL chairman and managing director U D Choubey recently said once it completed its 5,000 km of additional pipelines, the company's transmission revenues would rise to Rs 5,800 crore (Rs 58 billion) from Rs 2,000 crore (Rs 20 billion).