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 per cent stake of Petronet.
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 the 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 the first buy when in August 2011 Asian Development Bank (ADB) offered to sell its entire 5.2 per cent stake in Petronet.
All the four promoter firms IOC, ONGC, GAIL, and BPCL were originally interested in buying ADB’s 5.2 per cent stake but the management of Petronet was opposed to it as it would have led to PSU holding crossing 50 per cent.
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 March 26, 2012.
Eventually, ADB in September 2014 sold 3.9 crore shares via a block deal to CitiGroup and HDFC Mutual Fund for Rs 714.5 crore.
EDF holds 7.5 crore shares in Petronet, which at Friday’s closing price on BSE of Rs 448.15, is valued at Rs 3,361 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 per cent 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 per cent stake each in Petronet. Going by this proportion, they are each entitled to buy 2.5 per cent 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, sources added.
Source: Business-Standard