Oil ministry may veto oil company's plan to buy ADB stake in Petronet
24 April 2012 8:05 PM GMT
The Oil Ministry may be on the verge of vetoing oil PSUs' plan to acquire Asian Development Bank's stake in Petronet LNG Ltd (PLL) and instead may offer the premium stake to some strategic investor.
The ADB had on 23 August last year offered to sell its 5.2 per cent stake in Petronet, in which GAIL India, Indian Oil, Bharat Petroleum and Oil and Natural Gas Corp (ONGC) hold a 12.5 per cent stake each and a first right of refusal.
If the ADB stake goes to state firms, Petronet would be converted from a private firm into a public sector company and come under scrutiny of official auditor CAG and CVC besides parliamentary oversight, something that the company is opposed to.
Strangely, Oil Secretary has traditionally been the Chairman of Petronet even though their appointment as per norm has not been approved by the Cabinet Committee of Appointments.
'What we understand is that some progress is expected soon. The Ministry has asked (the four oil companies) to identify a strategic partner who the ADB stake can be offered to,' PLL Managing Director and CEO A K Balyan told reporters.
Gas utility GAIL, refiners IOC and BPCL and exploration firm ONGC had last year informed the ADB of their decision to exercise their Right of First Purchase/Refusal on the multilateral lending agency's stake.
It remains to be seen how the state firms, whose boards have approved of buying ADB stake in proportion of their shareholding, can be asked to backtrack.
'They want the stake to go to Qatar. But why should we give such a strategically important interest to Qatar unless they bring value. If they cannot sell gas to us at a discount, we don't think the ADB stake should go to them,' a top official at one of the promoter firms said.
India is seeking up to 5 million tonnes of liquefied natural gas from Qatar but the world's largest LNG exporter is demanding a price equivalent to 14.5 per cent of the international oil price, which translates into over four times the predominant domestic price of USD 4.2 per million British thermal unit.
Qatar currently sells 7.5 million tonnes of LNG on a long-term contract.
Oil Minister S Jaipal Reddy is believed to be against the idea of overriding the interest of GAIL, IOC, BPCL and ONGC but Petronet doesn't like to be converted into a public sector firm even though it has enjoyed the privileges equivalent to a national oil company in negotiations with gas suppliers.
'Given the nature of structure of the company and what it will change it, I think a strategic investor makes more sense,' Balyan said.
The ADB had on 23 August last year offered to sell its 5.2 per cent stake in Petronet, in which GAIL India, Indian Oil, Bharat Petroleum and Oil and Natural Gas Corp (ONGC) hold a 12.5 per cent stake each and a first right of refusal.
If the ADB stake goes to state firms, Petronet would be converted from a private firm into a public sector company and come under scrutiny of official auditor CAG and CVC besides parliamentary oversight, something that the company is opposed to.
Strangely, Oil Secretary has traditionally been the Chairman of Petronet even though their appointment as per norm has not been approved by the Cabinet Committee of Appointments.
'What we understand is that some progress is expected soon. The Ministry has asked (the four oil companies) to identify a strategic partner who the ADB stake can be offered to,' PLL Managing Director and CEO A K Balyan told reporters.
Gas utility GAIL, refiners IOC and BPCL and exploration firm ONGC had last year informed the ADB of their decision to exercise their Right of First Purchase/Refusal on the multilateral lending agency's stake.
It remains to be seen how the state firms, whose boards have approved of buying ADB stake in proportion of their shareholding, can be asked to backtrack.
'They want the stake to go to Qatar. But why should we give such a strategically important interest to Qatar unless they bring value. If they cannot sell gas to us at a discount, we don't think the ADB stake should go to them,' a top official at one of the promoter firms said.
India is seeking up to 5 million tonnes of liquefied natural gas from Qatar but the world's largest LNG exporter is demanding a price equivalent to 14.5 per cent of the international oil price, which translates into over four times the predominant domestic price of USD 4.2 per million British thermal unit.
Qatar currently sells 7.5 million tonnes of LNG on a long-term contract.
Oil Minister S Jaipal Reddy is believed to be against the idea of overriding the interest of GAIL, IOC, BPCL and ONGC but Petronet doesn't like to be converted into a public sector firm even though it has enjoyed the privileges equivalent to a national oil company in negotiations with gas suppliers.
'Given the nature of structure of the company and what it will change it, I think a strategic investor makes more sense,' Balyan said.
Next Story
