State-owned Hindustan Petroleum Corporation Ltd ( HPCL) will buy out the share of its joint venture partner SP Ports Pvt. Ltd (SPPPL) in the 5 million metric tonnes per annum LNG re-gasification terminal, that is being set up at Chhara in Gujarat.
SP Ports Pvt. Ltd is a unit of the Mumbai-based Shapoorji Pallonji Group, with the JV HPCL Shapoorji Energy Pvt. Ltd setting up the LNG re-gasification terminal. The venture with a 50:50 equity participation by HPCL and SPPPL is building the terminal at a cost of around Rs5,411 crore.
According to a filing with the BSE on Sunday, HPCL said, it “has entered into a share purchase agreement dated March 27, 2021 (“Share Purchase Agreement”) for the acquisition of 50% of the paid-up equity share capital of the Target Entity from SP Ports Private Limited.”
This transaction comes in the backdrop of cash-strapped SP Group trying to raise funds. It also comes at the time of the Supreme Court on Friday handing Tata Sons Ltd a major victory in its four-year-long feud with the Mistry family, its single-largest shareholder. The apex court refused to determine a fair value for the Mistry family’s 18.3% shareholding in Tata Sons.
The transaction is expected to be completed by the end of this month. This comes in the backdrop of India— the world’s fourth-largest LNG importer— building up its LNG portfolio, with domestic firms having inked long-term contracts totalling 22 million metric tonnes per annum (mmtpa). India consumes around 145 million standard cubic meters a day (mmscmd) of gas.
“Acquisition of shares of the Target Entity was done basis mutually agreed pre-money enterprise valuation. The said pre-money enterprise valuation has not been disclosed herein due to reasons of confidentiality,” HPCL added.
Gas comprises about 6.2% of India’s primary energy mix, far behind the global average of 24%. The government plans to increase this share to 15% by 2030. India’s gas demand is expected to be driven by fertilizer, power, city gas distribution, and steel sectors. India’s energy demand is expected to grow at 4.2% per year over the next 25 years.