Press Releases

[New Delhi, February 02, 2005]

GAIL enters into Co-operation Framework with China Gas

(Sl. No. ND/CC/05/05)

GAIL (India) Limited has entered into a Co-operation Framework with China Gas Holdings Limited facilitating GAIL to take 10 percent equity in China Gas. China Gas is a retail natural gas distribution company in China and is listed on the Hong Kong Stock Exchange with current market capitalization of over US $ 300 million. The company is mainly focusing on gas supplies to residential, commercial and industrial users in China. China Gas has established a number of Joint Ventures (JVs) for retail gas distribution in various provinces / cities and currently has operations covering major cities such as Beijing, Wuhu, Yichang and Huainan. GAIL will subscribe to new shares amounting to 10% of the enlarged total issued share capital of the Chinese Company. There will be a two year lock-up period for the investment.

The two companies will also incorporate a joint venture company for the purpose of investing in natural gas and other energy related projects in China. The proposed JV will have 50-50% equity of GAIL and China Gas.

The two companies would cooperate in the operation and management of city gas pipeline networks including the sale and distribution of natural gas through these networks; the construction, management and / or operation of long distance natural gas and / or other energy fuel pipeline and the sale and distribution of liquid petroleum gas, liquid natural gas, compressed natural gas and / or other energy fuels. GAIL will also facilitate training programmes for the employees of the Chinese company in all aspects of the gas business where GAIL has the requisite experience.

GAIL team is currently in China for evaluating the investment opportunity. The team is undertaking due diligence for technical, financial business and legal aspects of the company together with external consultants / advisors.