Japan’s Osaka Enters City Gas Distribution Biz in India

In line with its business expansion plans, Japanese company Osaka Gas has entered into the City Gas Distribution (CGD) business in India via its wholly-owned subsidiary Osaka Gas Singapore (OGS) by investing in AG&P CGD HoldCo SPV3 (Singapore) (AG&P SPV3), together with JOIN.

December 20, 2021. By Manu Tayal

In line with its business expansion plans, Japanese company Osaka Gas has entered into the City Gas Distribution (CGD) business in India via its wholly-owned subsidiary Osaka Gas Singapore (OGS) by investing in AG&P CGD HoldCo SPV3 (Singapore) (AG&P SPV3), together with Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN).

AG&P City Gas has been developing 12 CGD geographical areas it was awarded in South India and Rajasthan.

With this investment, Osaka Gas became the first Japanese company to participate in the CGD sector in India.

As a successful bidder for the city gas development projects supported by the Government of India (GoI), AG&P City Gas obtained exclusive gas sales rights and infrastructure ownership rights (exclusive rights) in India for a fixed period of time for its 12 concessions.

India promotes greater use of natural gas through the development of city gas infrastructure that supports the wider use of compressed natural gas vehicles (CNG vehicles) in response to the increasing energy demand and a need to reduce carbon emissions and air pollution resulting from economic growth in the country.

This city gas venture has been developed by the AG&P Group led by AGP International Holdings (AGPIH), AG&P SPV3’s parent company, in which Osaka Gas also invests in.

With exclusive rights for a vast swath of southern India, roughly equivalent to ¾ the area of Japan, the venture aims to develop into a business in a scale of 3.5 billion m3 in gas sales volume, which is approximately half of Osaka Gas’ city gas sales volume in Japan.

The venture also plans to promote city gas demand for CNG vehicles as well as for household, commercial, and industrial uses, and utilize LNG lorries as one of the main gas supply system, which is introduced for the first time to India, to reduce the time for the development and roll-out of the city gas infrastructure.

AG&P CGD, the operator of this city gas business, has been jointly owned by AGPIH, the leading downstream LNG platform and infrastructure development company, has been rapidly expanding its business in new and emerging demand centers in Southeast Asia and India, I Squared Capital Advisors (ISQ), a US infrastructure investment fund with a successful track record for projects in India, JOIN, a public-private fund supporting Japanese businesses for developing infrastructure projects overseas with their knowledge, technology, and experience accumulated in Japan, and Osaka Gas, which is dispatching its members to provide support to the venture for engineering solutions and commercial know-how of a city gas business.

Osaka Gas has been expanding its business of gas distribution, gas sales to industrial customers, energy services, rooftop solar power generation in Southeast Asia.

Following the investment in AGPIH and the Collaboration Agreement signed with AGPIH in 2019, Osaka Gas has been building a natural gas value chain that includes LNG receiving terminal, power plant, and LNG supply businesses in emerging LNG markets in the region. Osaka Gas aims to develop this city gas venture in India into one of its core businesses in Asia and to contribute to carbon emissions reduction and stable energy supply in India.
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