Indian Oil may drop plan to buy stake in Mundra terminal
MUMBAI/AHMEDABAD: State-run Indian Oil Corp. Ltd (IOCL) may drop its plan to acquire as much as 50% stake in the Mundra LNG terminal in Gujarat, three officials aware of the development said. In August 2017, Indian Oil said it has received an in-principle approval from its board to buy a 50% stake in the 5 million tonnes per annum terminal (mtpa) for around ₹750 crore.
The ₹5,000 crore project is being built by GSPC LNG Ltd, a unit of Gujarat State Petroleum Corp. Ltd (GSPC). Currently, GSPC owns a 50% stake in the project, while Adani group holds 25%. Adani and GSPC were looking at inducting a strategic partner such as Indian Oil.
“IOCL recently informed GSPC LNG that it would not like to go ahead with its plans of picking up a stake in the terminal,” said a Gujarat government official aware of the discussions.
It is, however, not clear if Indian Oil would still book LNG import capacity in the terminal.
Indian Oil did not respond to an email sent last week. A GSPC group official declined to comment on the development.
In October, Prime Minister Narendra Modi inaugurated the LNG terminal, the third LNG re-gasification project in Gujarat after Petronet LNG’S Dahej LNG terminal and the Hazira project of Shell Gas BV, a unit of Royal Dutch Shell Plc. “Indian Oil carried out due diligence for the project and has found that there are some issues that come in the way of their proposed plans,” said the second official cited above, who also declined to be named.
While one of the main reasons cited by Indian Oil is that a concession and sub-concession agreement between the special purpose vehicle, GSPC LNG, and maritime regulator Gujarat Maritime Board is yet to be signed, the expenditure made towards the port and port-led development is another stumbling block for the refiner, the official said.
An industry official, the third cited above, said GSPC LNG has invested close to ₹1,200 crore for dredging and other port-led development activities, which IOCL finds hard to justify to their board because the expenditure was not part of the discussions when IOCL expressed interest in investing in the LNG terminal.