Oil ministry may block PSUs buying GDF International’s 10% stake in Petronet LNG
Oil ministry is opposed to four promoters IOC, ONGC, GAIL and BPCL buying 10% stake of France’s GDF International in Petronet LNG as it would lead to PSUs holding above 50%
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New Delhi: Oil ministry may block any attempt by state-owned GAIL, IOC, ONGC and BPCL to buy 10% stake of France’s GDF International in Petronet LNG Ltd as it is keen to keep the liquefied natural gas importer a private limited company.
GDF, a unit of French energy giant Engie SA, has written to sell its entire stake in Petronet to the company’s principal promoters—gas utility GAIL India Ltd, explorer Oil and Natural Gas Corp (ONGC) and refiners Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL).
At present, the four companies hold 49.99% stake of Petronet. If any of the promoters were to buy GDF’s stake, the combined shareholding of state-owned firms will rise above 50% and will lead to conversion of Petronet into a public sector company, something that oil ministry does not want, officials privy to the development said.
Though Petronet is registered as a private company, Government of India’s secretary in the ministry of petroleum and natural gas is its chairman. By its private nature, the company is currently out of purview of CAG audit as well as any parliamentary scrutiny.
“We can exercise our right of first refusal to buy GDF stake but what is the use. We will never get permission from the ministry,” a top official at one of the promoters said. The ministry’s desire to keep the company private had led to none of the four promoters exercising their right of first buy when in August 2011 Asian Development Bank (ADB) offered to sell its entire 5.2% stake in Petronet.
All the four promoter firms IOC, ONGC, GAIL and BPCL were originally interested in buying ADB’s 5.2% stake but management of Petronet was opposed to it as it would have led to PSU holding crossing 50%. The board of all the four promoter companies approved exercising the first right of refusal over ADB stake but the ministry vetoed the proposal at a meeting on 26 March, 2012. Eventually, ADB in September 2014 sold 3.9 crore shares via a block deal to CitiGroup and HDFC Mutual Fund for Rs714.5 crore.
Petronet is India’s biggest importer of liquefied natural gas.
GDF International had in March sent a communication to each of the promoters offering “a first right of purchase/refusal in relation to the proposed sale of 10% equity shares in the company in the same proportion in which the promoters are holding equity shares in the company.”
The four promoter firms hold 12.5% stake each in Petronet. Going by this proportion, they are each entitled to buy 2.5% of GDF’s stake. But now, it is unlikely that anyone of them will exercise that option given that Petronet has been structured as a private company, officials added.