India’s first and only city gas distribution firm run on the lines of a
cooperative has received conditional approval from the Petroleum and
Natural Gas Regulatory Board (PGNRB) to continue operations, winning a
reprieve two years after it was told to convert into a company or face
closure.
Charotar Gas Sahakari Mandali Ltd (CGSML), a 13-year-old gas distributor based in the district of Anand known for the “white revolution” that turned India into the world’s largest milk producer, was founded in 1999 as a cooperative. In June 2010, CGSML was told by the regulator to seek registration under the Companies Act.
“CGSML had requested PNGRB for exemption from registering under the Companies Act. We have accepted their request and have issued terms and conditions in a letter dated 22 June for grant of authorization,” said an official at PNGRB, formed in 2007, who didn’t want to be named.
To promote transparency and accountability, PNGRB had told all city gas distribution companies to incorporate themselves as companies or face closure.
Getting registered as a company was almost an impossible task for Charotar Gas because it would have first had to wind up operations under the Gujarat Cooperative Societies Act, 1961, said an official at the cooperative who didn’t want to be named.
“This is very time consuming and complicated to implement for a functioning cooperative. We did try to go through this exercise but gave up as it was not a practical move,” he said.
The terms and conditions weren’t disclosed by the PNGRB official.
“The move to consider our case as special was expected and we welcome it. But we are reluctant about one or two conditions they have laid and would like them to reconsider. For instance, they want a credit letter of Rs.3 crore,” said CGSML managing director Yashvantbhai Patel. The matter will be presented before the cooperative’s board later this month.
The idea of a gas distribution run as a cooperative was born in 1998 when Mumbai-based businessman Sanjeev Nair, chairman of Interlink Petroleum Ltd, a BSE-listed oil and gas company, sought a Rs.15 crore loan from Charotar Cooperative Bank to build a gas pipeline from Bavla to Ahmedabad.
The gas for the project was to be sourced from a nearby Oil and Natural Gas Corp. Ltd (ONGC) field as per the project proposal.
The bank’s then chairman Chimanbhai Patel was excited by the idea. He wanted to extend the pipeline to Anand and floated the idea of forming a cooperative for distributing gas in Anand with the involvement of locals, said Yashvantbhai Patel, managing director of Charotar Gas.
The company’s revenue in the last fiscal was close to Rs.75 crore. Its single largest customer is Gujarat Cooperative Milk Marketing Federation, which markets dairy products under the brand Amul. It also supplies gas to households in a dozen villages—mainly the families of low-income agricultural workers toiling in tobacco and paddy fields—and small scale industries and institutions in Anand and Kheda districts.
“We make as little as 28 paise profit per cubic metre (of gas) for household customers,” said Yashvantbhai Patel.
The focus is on volumes. It adds at least 250 customers every month.
“Charotar Gas’ success story has been scripted by using costly imported LNG and still managing to rake in handsome money. Other CGDs (city gas distributors) in the country should try and follow its success formula,” said L. Mansingh, the first chairman of PNGRB, whose term ended in October 2011.
About 40km from Anand is another unique CGD in the city of Vadodara. It is the oldest CGD running on natural gas for over 40 years now and covers 72,000 city households.
The venture, Vadodara City Gas Distribution Project, run by the local civic body, also sought exemption from having to register as a company, but its request hasn’t been accepted, said a government official close to the development who didn’t want to be named.
GAIL (India) Ltd had received central government approval for city gas distribution in Vadodara prior to the PGNRB coming to existence. The Vadodara civic body and GAIL are in the process of tying up to start a new city gas distribution firm.
“The civic body venture will be merged into the new entity and it will hold 24% stake and GAIL will have 26%, said S.K. Naik, project engineer (Gas), Vadodara Municipal Corporation. The balance will go to financial institutions.
The new joint venture (JV) plans to cover 450,000 households in Vadodara and 2,000 commercial customers by investing Rs.400 crore to strengthen and expand the existing CGD network and create additional infrastructure.
“Once they submit the details of the JV after its incorporation, the case will be further processed,” said the same PNGRB official quoted above.
Charotar Gas Sahakari Mandali Ltd (CGSML), a 13-year-old gas distributor based in the district of Anand known for the “white revolution” that turned India into the world’s largest milk producer, was founded in 1999 as a cooperative. In June 2010, CGSML was told by the regulator to seek registration under the Companies Act.
“CGSML had requested PNGRB for exemption from registering under the Companies Act. We have accepted their request and have issued terms and conditions in a letter dated 22 June for grant of authorization,” said an official at PNGRB, formed in 2007, who didn’t want to be named.
To promote transparency and accountability, PNGRB had told all city gas distribution companies to incorporate themselves as companies or face closure.
Getting registered as a company was almost an impossible task for Charotar Gas because it would have first had to wind up operations under the Gujarat Cooperative Societies Act, 1961, said an official at the cooperative who didn’t want to be named.
“This is very time consuming and complicated to implement for a functioning cooperative. We did try to go through this exercise but gave up as it was not a practical move,” he said.
The terms and conditions weren’t disclosed by the PNGRB official.
“The move to consider our case as special was expected and we welcome it. But we are reluctant about one or two conditions they have laid and would like them to reconsider. For instance, they want a credit letter of Rs.3 crore,” said CGSML managing director Yashvantbhai Patel. The matter will be presented before the cooperative’s board later this month.
The idea of a gas distribution run as a cooperative was born in 1998 when Mumbai-based businessman Sanjeev Nair, chairman of Interlink Petroleum Ltd, a BSE-listed oil and gas company, sought a Rs.15 crore loan from Charotar Cooperative Bank to build a gas pipeline from Bavla to Ahmedabad.
The gas for the project was to be sourced from a nearby Oil and Natural Gas Corp. Ltd (ONGC) field as per the project proposal.
The bank’s then chairman Chimanbhai Patel was excited by the idea. He wanted to extend the pipeline to Anand and floated the idea of forming a cooperative for distributing gas in Anand with the involvement of locals, said Yashvantbhai Patel, managing director of Charotar Gas.
The company’s revenue in the last fiscal was close to Rs.75 crore. Its single largest customer is Gujarat Cooperative Milk Marketing Federation, which markets dairy products under the brand Amul. It also supplies gas to households in a dozen villages—mainly the families of low-income agricultural workers toiling in tobacco and paddy fields—and small scale industries and institutions in Anand and Kheda districts.
“We make as little as 28 paise profit per cubic metre (of gas) for household customers,” said Yashvantbhai Patel.
The focus is on volumes. It adds at least 250 customers every month.
“Charotar Gas’ success story has been scripted by using costly imported LNG and still managing to rake in handsome money. Other CGDs (city gas distributors) in the country should try and follow its success formula,” said L. Mansingh, the first chairman of PNGRB, whose term ended in October 2011.
About 40km from Anand is another unique CGD in the city of Vadodara. It is the oldest CGD running on natural gas for over 40 years now and covers 72,000 city households.
The venture, Vadodara City Gas Distribution Project, run by the local civic body, also sought exemption from having to register as a company, but its request hasn’t been accepted, said a government official close to the development who didn’t want to be named.
GAIL (India) Ltd had received central government approval for city gas distribution in Vadodara prior to the PGNRB coming to existence. The Vadodara civic body and GAIL are in the process of tying up to start a new city gas distribution firm.
“The civic body venture will be merged into the new entity and it will hold 24% stake and GAIL will have 26%, said S.K. Naik, project engineer (Gas), Vadodara Municipal Corporation. The balance will go to financial institutions.
The new joint venture (JV) plans to cover 450,000 households in Vadodara and 2,000 commercial customers by investing Rs.400 crore to strengthen and expand the existing CGD network and create additional infrastructure.
“Once they submit the details of the JV after its incorporation, the case will be further processed,” said the same PNGRB official quoted above.
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