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    Japanese group invests $120mn in AG&P City Gas

Summary

AG&P City Gas, a unit of Singapore's AG&P, is developing 12 city gas distribution networks in India under the brand name AG&P Pratham.

by: Shardul Sharma

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Japanese group invests $120mn in AG&P City Gas

AG&P City Gas, a unit of Singapore-based AG&P, has received a $120mn investment from Osaka Gas and Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN), AG&P said on December 20.

AG&P City Gas is developing 12 city gas distribution networks in India under the brand name AG&P Pratham. The new equity financing will be used to continue to execute AG&P City Gas’s build-out of its exclusive concessions in South India and Rajasthan, the company said.

In its 12 concessions, AG&P City Gas is responsible for developing and operating compressed natural gas (CNG) stations for vehicles, piped natural gas to homes, and the distribution of LNG to industrial and commercial customers. City gas projects benefit from marketing exclusivity in their designated areas for eight to ten years and construction exclusivity of related infrastructure for 25 years.

“We strongly believe that our investment in AG&P City Gas will provide Osaka Gas with a valuable asset. We look forward to developing it into one of our core businesses in Asia,” said Katz Sato, senior general manager, Asia energy business department for Osaka Gas. “With exclusive rights for a vast swath of southern India, roughly equivalent to three-quarters of the area of Japan, these 12 concessions are expected to generate over time a demand of 3.5bn m3 in gas sales volume, or approximately 50% of Osaka Gas’ recorded gas sales volume last year on a non-consolidated basis.”

JOIN, a Japanese government-private sponsored infrastructure investment fund company, received approval from the minister of land, infrastructure, transport and tourism of Japan to invest in AG&P City Gas to support Osaka Gas’s ongoing collaboration with AG&P in expanding its overseas businesses.

“The partnership with AG&P and Osaka Gas is also very important because it will help Japanese companies develop a strong cargo transport business using CNG vehicles in India, which will contribute to Japan’s priority policy of carbon neutrality and protect the health and lives of thousands of Indians,” said Toshiyuki Suzuki, managing executive officer and head of the project department for JOIN.

This is the second investment that AG&P City Gas has received in four months. In August, AG&P City Gas received $200mn from US-based I Squared Capital. Combined with the investment from the Osaka Gas and JOIN consortium, the total equity infusion available for AG&P City Gas is over $300mn, AG&P said.