Three PSU promoters may not buy ADB's stake in Petronet
New Delhi: Under orders from the Oil Ministry, three state-owned firms IOC, ONGC and BPCL have done a U-turn on buying Asian Development Bank's stake in Petronet LNG by deciding not to press for the acquisition.
The ADB on August 23 last year offered to sell its 5.2 percent stake in Petronet LNG Ltd (PLL), in which gas utility GAIL, IndianOil (IOC), Bharat Petroleum (BPCL) and Oil and Natural Gas Corp (ONGC) hold 12.5 percent stake each and have a first right of refusal.
The board of all the four promoter companies approved exercising the first right of refusal over ADB stake and offered cash buyout of the multilateral lending agency's interest.
However, the ministry, whose Secretary is the Chairman of PLL, vetoed the proposal at a March 26 meeting as it wanted the company to continue as private firm that does not attract audits by CAG or come under purview of CVC, sources said.
Subsequently, the boards of IOC, ONGC and BPCL, they said, have agreed to forego their pre-emption rights and have reversed their previous decision to acquire ADB stake.
GAIL, which had been spearheading the move to acquire ADB stake, has however not yet waived its pre-emption rights.
"Keeping in view the specific approval of the Cabinet on restricting the aggregate Government/PSU participation to 50 percent of paid-up capital for providing the desired flexibility to Petronet to operate in a dynamic LNG import market, the existing shareholding structure in the context of PSU participation, should be retained," minutes of the March 26 meeting stated.
If the ADB stake went to state firms, PLL would come under scrutiny of official auditor CAG and CVC because of PSU holding exceeding 50 percent, something that the company and the ministry was opposed to.
The ministry has instead asked the PSUs to offer the ADB stake to a strategic investor, like an LNG supplier, they said.
Sources said the ministry is keen on offering the ADB stake to Qatar in lieu of getting an additional 4 million tons a year of LNG supplies on a long-term contract.
But companies like GAIL are opposed to the idea unless Qatar agrees to sell LNG at a discount to its current asking price of an equivalent to 14.5 percent of the ruling global oil price, which translates into over four times the predominant domestic price of USD 4.2 per million British thermal unit.
Gaz de France International (GDFI) holds a 10 percent in Petronet and also has the right of first refusal over ADB's stake. But the French energy giant has decided to waive its right.
In that even, ADB's 5.2 percent stake was to be split equally among the four PSU promoters.