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Indian Oil-Adani Gas JV to pump in Rs 9,600 crore for retailing CNG, PNG

The two firms sought shareholders’ nod to provide corporate guarantees to banks on behalf of their JV and furnish performance bank guarantees to PNGRB to fulfill the licence conditions.

Published: 30th July 2019 07:51 AM  |   Last Updated: 30th July 2019 07:51 AM   |  A+A-

Indian Oil Corporation

Indian Oil Corporation Limited

By Express News Service

NEW DELHI:  State-run Indian Oil Corporation (IOC) and partner Adani Gas Ltd have lined up investments worth Rs 9,600 crore to set up infrastructure for retailing Compressed Natural Gas (CNG) to automobiles and Piped Natural Gas (PNG) to households in 10 cities for which they have won licences for.

The two firms, in 2013, had incorporated a 50:50 joint venture company, IndianOil-Adani Gas Pvt Ltd (IOAGPL), for implementation of City Gas Distribution (CGD) projects in various parts of the country. Over the years, IOAGPL participated in various rounds of bids for city gas licence conducted by Petroleum and Natural Gas Regulatory Board (PNGRB). Currently, it has licences for 19 geographical areas (GA), IOC told shareholders.

The notice was to seek shareholders’ nod to provide corporate guarantees to banks on behalf of IOAGPL, and furnish performance bank guarantees to PNGRB to fulfill the licence conditions. “In line with PNGRB regulations, authorisation to the successful entity is issued by PNGRB only after the entity submits Performance Bank Guarantee from any scheduled bank for a pre-determined amount for specific GA,” IOC said in the notice. Shareholders will vote on the proposal at IOC’s annual general meeting on August 28.

Typically, CGD projects, which entail retailing CNG to automobiles and marketing PNG to household cooking, and as fuel to industries, are long-duration projects wherein demand build-up is gradual and revenue generation becomes appreciable only in the later years. “IOAGPL is still in the process of development of CGD Projects in its authorised GAs,” IOC said. 

Currently, projects in eight GAs have been commissioned and South Goa GA will be commissioned shortly. “In 2018-19, IOAGPL won 10 more GAs and development of CGD project in these GAs would require capital of Rs 9,600 crore (approx.) to meet the committed bid numbers. The funding required for capex has to be met from equity contribution/ debt financing,” IOC added.

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