GAIL, HPCL ink pact for supply of coal-bed methane

State-owned GAIL (India) and Hindustan Petroleum (HPCL) have signed a pact with the West Bengal government to form a JV with Greater Calcutta Gas Supply (GCGSCL) to supply coal-bed methane gas (CBM) in the state.

CBM is a form of natural gas extracted from coal beds, which has become an important source of energy in recent decades. Unlike much of the natural gas from conventional reservoirs, CBM contains very little of heavier hydrocarbons.

GCGSCL, a West Bengal government-owned firm, currently supplies cooking gas derived from coal in Kolkata and Howrah. According to the estimated figures, GCGSCL has a customer base of around 10000, and sources gas from Dankuni Coal Complex of Coal India. The state gas firm has a 458 km long gas pipeline in the state, and currently supplies 1.80 lakh cubic metres of gas.

As per the MoU, HPCL and GAIL will each have a stake of 37% in the special purpose vehicle (SPV), and the remaining 26% will be with GCGSC. The SPV will set up an integrated gas grid in Kolkata and the surrounding districts. It will invest Rs 2000 cr over the next 2-3 years to build a gas pipeline from the coalfields of Assansol and Raniganj to Kolkata. Around 70% of this amount will be raised in the form of debt, and the SPV aims to supply 10 million standard cu. metres of gas a day to the state, which is enough for generating 200 MW of energy. Of this, 70% will go to industrial consumers, 5% to households and the remaining 25% will be used by automobiles.

According to sources, the newly-formed SPV will apply to the Petroleum and Natural Gas Regulatory Board (PNGRB) for a gas distribution license in Kolkata Metropolitan Area (KMA). Once completed, the new gas infrastructure will supply green fuel to KMA, covering Kolkata, North 24 Parganas, South 24 Parganas, Howrah, Hooghly, Kalyani and Nadia.

The SPV is expected to improve the existing infrastructure of GCGSC, and will build a new gas grid to scale up the company’s underground city gas distribution network.