New Delhi: Asian Development Bank is likely to exit Petronet LNG Ltd by selling its 5.2% holding in the country’s biggest liquefied natural gas importer possibly to promoters or billionaire Lakshmi Mittal.
ADB and German Development Bank KfW had recently approved a loan of $169 million to Petronet for its expansion projects at Dahej and new terminal at Kochi, but the multilateral lending agency’s internal norms prohibit it from having both debt and equity exposure in a given company.
“In 2004, ADB had sanctioned $75 million loan to Petronet. But once it took 5.2 % stake for less than $8 million, ADB could not disburse the balance due to its internal regulations,” said Prosad Dasgupta, CEO and managing director, Petronet.
ADB norms also stipulate it to divest its equity holding in a company three years from the date of the company going public. Petronet’s IPO came in 2004 and ADB was supposed to exit Petronet in 2007, but was persuaded to stay on for a year.
Now with fresh debt, for which ADB and KfW have signed financing agreements, the Manila-based lending agency may exit Petronet by year end, he said. “Who they sell it to is none of our business.”
Though Dasgupta refused to say if Mittal was interested in ADB stake in Petronet, industry sources say Mittal was keen but would first want company promoters GAIL India, Indian Oil, Bharat Petroleum and ONGC to waive their pre-emption rights.
The four state-run firms who have 12.5% stake each along with 10% partner GdF of France hold first right of refusal over ADB stake. Even though GAIL and IOC are keen to pick up ADB stake, they may not be allowed to do so by the Petroleum Ministry.
GAIL, IOC, BPCL and ONGC hold a fraction less than 50% in Petronet, thereby not making the company a PSU or state-run firm.
If the promoters were to even pick up half of ADB’s 5.2%, with the remaining being taken by GdF, the company would turn into a public sector firm, a scenario that Petroleum Ministry doesn’t want, sources said.
Though Petroleum Secretary is the chairman of Petronet and the company enjoys government patronage, it has stayed away from the scrutiny a PSU is subjected to by its sheer nature of shareholding.
The Ministry may want to keep Petronet outside the PSU purview, sources said.
Dasgupta said drawdown from the ADB-KfW’s new debt were to happen in September/October, when construction at Petronet’s Kochi terminal catches pace.
Petronet is expanding its Dahej terminal from 6.5 million tons to 10 million tons and constructing a 5 million tons a year new LNG import terminal at Kochi in Kerala by 2011.