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Gail to buy 10% in China Gas
By siliconindia
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Thursday, 03 February 2005, 20:30 IST
NEW DELHI: Gail, India's largest gas transporter, will acquire 10 percent of Hong Kong listed retail natural gas distribution company, China Gas.
China Gas, a 300 million dollar company, is tying up for the third time with a foreign company leveraging on China's potentially fast-growing natural gas distribution sector. The company's hard core process lie in gas supplies to residential, commercial and industrial users in China.
Coal-dependent China is encouraging the use of cleaner burning gas and aims to double consumption to 7 percent of the country's mix by 2010. That compares with over 20 percent in developed countries.
The deal follows two recent preliminary agreements to sell up to 10 percent of the company each to state-run Korea Gas Corp. (KOGAS) and Singapore's City Gas Pte. Ltd.
GAIL and KOGAS are joining other big names -- including Russia's Gazprom, Italy's largest utility Enel and tycoon Li Ka-shing -- to tap the fledgling China city gas distribution business, which boasts 70 percent margins on connection fees and over 30 percent margins on gas sales, said the reuters report.
GAIL will take up to 10 percent of the Hong Kong-listed firm through a share subscription and has agreed not to sell the shares for two years, China Gas said in a statement.