GAIL to clear air for Beijing Olympics

New Delhi, August 22, 2005 GAIL (India) Limited is set to play a crucial role in converting the mass transportation system of Beijing to CNG before the Beijing Olympics to be held in 2008. China has decided to introduce CNG in Beijing city for converting entire transport vehicles by 2008, before commencement of the Olympics. Currently, the number of buses and taxis in Beijing are 20,000 and 80,000 respectively. GAIL hopes to bring down vehicular pollution levels significantly through this project as it did in Delhi and Mumbai.

GAIL is pursuing equity participation in Beijing Gas Company and Beijing Jianggang Gas for implementation of CNG projects in Beijing City. Beijing Gas Company has got the concession to introduce CNG in Municipality area of Beijing. Beijing Jianggang Gas is a JV formed by China Gas Holdings Limited and Beijing Gas Company for supply of natural gas in the 6 suburb districts of Beijing. While GAIL holds stake in China Gas Holdings, the later has a 49 per cent stake in Beijing Jianggang Gas company. During the recent visit of a high level GAIL team led by Mr. Proshanto Banerjee, Chairman and Managing Director; discussions were held with China Gas Holdings Limited for GAIL’s participation in CNG projects of Beijing municipality area as well as in the six suburb districts of Beijing.

Considering the merits of natural gas as clean fuel, People Republic of China is adopting policies which encourage use of natural gas in place of town gas (coal gas) in the cities as well as CNG in transport sector. It is understood that urgency is being assigned for large scale introduction of CNG in time bound manner.

GAIL has also been offered three cities in mainland China viz. Wuhu city in Anhui province, Huainan and Yichang cities in Hubei province for CNG projects. The projects will be executed by Joint Ventures between GAIL and China Gas Holding Limited.

Considering GAIL’s expertise in successful CNG projects in Delhi and Mumbai, China Gas Holding has proposed a separate JV arrangement to develop CNG business in China. The total number of CNG vehicles in these two Indian cities has grown to 243,889 which are being serviced by 245 CNG stations. This has helped the two cities in reducing the pollution level and improving the air quality. For instance, in Delhi, the Suspended Particulate Matter (SPM) levels have decreased by 27 percent and the oxides of Sulphur have reduced by 80 per cent during the period 1991-2004. GAIL is set to expand CNG use in other major cities in India as more gas supplies materialize and pipeline systems are developed in different parts of the country.

GAIL and China Gas Holdings Limited will also form master Joint Venture (50:50) for developing CNG projects in the existing as well as future projects of the Chinese company. GAIL team has discussed issues related to master JV for CNG projects and the Agreement is under finalisation. Subsequently, the master JV will form Project Company for CNG in each of the identified cities which are serviced or would be serviced by China Gas Holdings Limited.

GAIL has made a strategic investment in China Gas Holdings Limited (CGHL) which has already secured concessions on exclusive basis for Operation and Management of natural gas including Compressed Natural Gas (CNG) and City Gas in 43 cities in China. The company expects to secure more such concessions for going forward. GAIL signed a share subscription agreement with China Gas Holdings Limited during February 2005 and has acquired 210 million shares of the China Gas Holdings Limited. The other shareholders of China Gas Holdings Limited are SINOPEC, a National Oil and Gas Company of China and Taiwan State Affairs of the State Council, a govt. body. KOGAS of Korea and City Gas of Singapore are also considering acquiring equity stakes in China Gas Holdings Limited.