GSPL

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	25637
Company name	Gujarat State Petronet Ltd.
Country	India
Sector	Utilities
Environmental category	B
Department	Infrastructure
Status	Active

Date SPI disclosed	April 13, 2007
Projected board date	May 17, 2007
Previous Events	Invested: October 1, 2007 Signed: June 29, 2007 Approved: May 22, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Gujarat State Petronet Limited (GSPL or the company) is a public-private partnership established in 1998 by Gujarat State Petroleum Corporation Limited (GSPC), a company majority owned by the government of Gujarat (GoG), for the purpose of constructing and managing a statewide gas transmission network in the State of Gujarat. GSPL is the only natural gas transmission company in India that operates on an “open access” basis, i.e. it transports gas on behalf of third party shippers in return for a transport fee. GSPL’s existing gas transmission network comprises 1,080 km medium-to-high pressure pipelines connecting natural gas supply points at Hazira and Dahej to consumption points currently covering the districts of Ahmedabad, Anand, Baroda, Bharuch, Gandhinagar and Surat. The majority of GSPL’s customers are power, fertilizer, chemical and steel plants that purchase natural gas directly from suppliers, as well as several local gas distribution companies who supply natural gas to retail consumers.

GSPL is continuing with the expansion of its gas transmission network in Gujarat. It plans to expand its network by about 800 km over the next 3 years, including:

- the BJPL project, which consists a 190 km loop line from Bhadbhut to Hadala and a 110 km extension from Rajkot to Jamnagar;
- a 46km extension of the transmission line from Baroda to Godhra;
- the construction of a 225 km pipeline from Dhandhuka to Jafrabad; and
- a 225 km extension of the pipeline from Morbi to Mundra.

Anticipated development impact of the project

The expansion of the GSPL network will lead to additional availability of gas to meet the growing needs of users in key sectors such as power that directly impact economic growth and quality of life for all sections of society, particularly the poor. The project will also further the GoI agenda to increase transparency and competition at a critical juncture for India’s gas sector, through providing increased opportunities for consumers to contract directly for gas with suppliers. The substitution of petroleum fuels and coal by natural gas in industry will have important environmental benefits that include large reductions of nitrous oxide, carbon monoxide, sulfur dioxide, and total organic compounds when compared on a calorific-equivalent basis for alternative fuels. The increased use of natural gas also carries with it important safety benefits since it eliminates the need for storage facilities. Expanded gas use in Gujarat will also lower energy costs for industry thereby increasing the competitiveness of Indian industry.

IFC's expected development contribution

IFC’s support to such a project will result in moving GSPL further on the path of becoming a true public-private partnership that is professionally managed and commercially operated. IFC’s participation will also assist GSPL improve its corporate governance and environmental management practices. IFC will also provide long term financing to the company which are not readily available in the local market.

Environmental and social issues - Category B

This is a category B project according to IFC’s environmental and social review procedure because a limited number of specific social and environmental impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The following potential environment, health and safety and social aspects of the project were analyzed:

- environment and social assessment and corporate environmental, social, and health and safety management systems;
- community consultation, disclosure and engagement;
- labor and working conditions including management of employee occupational health and safety;
- pollution prevention and abatement (including management of resources including energy, water, hazardous and other materials;
- management of emissions, discharges, hazardous and other wastes);
- biodiversity conservation;
- management of community environment, health and safety impacts during construction and operation;
- management of Right of Use (ROU) acquisition on account of the project;
- management of impacts on indigenous peoples where relevant and applicable; and
- management of impacts on cultural heritage including chance find procedures.

A summary discussion on the social and environmental aspects of relevance to the project including the company’s plans to address these impacts has been provided in the Environmental and Social Review Summary (ESRS) prepared by IFC and publicly disclosed at IFC’s website.

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