Reliance Gas Corporation Ltd (RGC), a subsidiary of Reliance Industries, has been roped in by the Andhra Pradesh as a majority partner in the Krishna Godavari Gas Network Ltd, (KGGNL) a special purpose vehicle carved out for gas distribution through a pipeline grid.

KGGNL is a joint venture of Infrastructure Corporation of AP (Incap), Gujarat State Petroleum Corporation (GSPC) and Infrastructure Development Finance Corporation (IDFC). According to the latest restructuring, the RGC will hold 67 per cent, while the state government, GSPC and IDFC will have 11 per cent stake each and InCAP shall hold 11 percent for the Andhra Pradesh Government.

It was stated by the Andhra Pradesh Information Minister, Mr. A. Ramnarayan Reddy "Due to certain developments regarding the availability of natural gas in the K-G basin, it is observed that GSPC may not be able to supply gas until at least 2011-12, which means that KGGNL has to wait for three more years if it has to develop the gas network,” meanwhile RGC has struck huge gas reserves in the K-G basin and can start supplying gas immediately.

The original equity base of KGGNL stood at Rs 100 crore. However now that there would be a substantial increase in equity following the induction of RGC, the details of which were now being worked out.

Reliance Industries (RIL) and Reliance Natural Resources (RNRL) are locked in a legal tussle over the supply of gas from the Krishna Godavari (KG) basin. But the state government officials maintained that today’s decision to rope in RIL was independent of the court case.

Reddy said the restructured KGGNL would soon submit bids to the Petroleum and Natural Gas Regulatory Board (PNGRB), constituted by the central government, for laying the gas distribution network. The board has already received bids from RGC to lay the gas pipeline network in Hyderabad, Kakinada, Tirupati, Vijayawada, Visakhapatnam and Rajahmundry.