New Delhi State-owned Indian Oil Corp. (IOC) on Friday said it will acquire up to a 50% stake in the Adani Group-backed Mundra LNG import terminal in Gujarat for an estimated Rs750 crore.
The board of India’s largest oil firm gave “in-principle approval for acquiring up to 50% equity in GSPL LNG Ltd, which is setting up a 5 million tons per annum LNG terminal at Mundra Port in Gujarat", the company said in a statement. GSPL LNG Ltd is a joint venture of Gujarat State Petroleum Corp. and Adani Enterprises Ltd. GSPL LNG Ltd will hold the remaining 50% stake in the LNG terminal that is nearing completion. Adani and GSPC are equal partners in GSPL LNG Ltd.
While the company did not give the acquisition cost, an official said roughly 30% of the Rs5,040 crore project cost is equity and IOC would pay for half of it. A final number would be arrived at after valuation exercise is completed, he added. IOC said the LNG terminal would be commissioned in the fourth quarter of 2017-18 fiscal year. It will have receipt, storage and re-gasification facilities for liquefied natural gas (LNG) and will be connected to Gujarat State Petronet Ltd’s (GSPL) existing pipelines network at Anjaar, Gujarat.
As the second-largest natural gas player in the country, IOC is making significant investments in natural gas infrastructure and marketing in line with the country’s changing energy mix. “We already have investments across the gas value chain, from LNG import terminals to city gas distribution networks, the major among them being a 5 million tons LNG import terminal at Kamarajar port near Chennai, scheduled for commissioning in 2018-19," IOC chairman Sanjiv Singh said.
Mundra would be the second LNG project of Adani where IOC is investing. IOC has taken 39% stake in the proposed 5 million tons a year LNG import terminal at Dhamra in Odisha. Adani Group has 50% in the project and the remaining 11% is with state-owned gas utility GAIL India Ltd.
When GSPL LNG put up on offer stake in the Mundra LNG project three to four years back, eight firms including GAIL had expressed interest in buying the stake but only three were shortlisted. Besides IOC, India Gas Solutions Pvt. Ltd, the equal joint venture between the Mukesh Ambani-led Reliance Industries and Europe’s second-largest oil firm BP, and state-owned Oil and Natural Gas Corporation (ONGC) were shortlisted.
Mundra terminal, which is to be financed in a debt to equity ratio of 70:30, is expandable up to 10 million tons per annum in the near future.