Oil Min may block oil PSUS buying GDF stake in Petronet

NEW DELHI: Oil Ministry may block any attempt by stateowned GAIL, IOC, ONGC and BPCL to buy 10 per cent stake of France's GDF International in Petronet LNG Ltd as it is keen to keep the liquefied natural gas importer a private limited company.

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.

If any of the promoters were to buy GDF'S stake, the combined shareholding of stateowned firms will rise above 50 per cent and will lead to conversion of Petronet into a public sector company, something that oil ministry does not want, sources privy to the development said. 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 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 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 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.

Petronet is India's biggest importer of liquefied natural gas

NEW DELHI: Overseas investors have pumped in more than $2 billion so far in the country's capital market this month, helped by stable outlook for the rupee.

Interestingly, most of the funds have been invested in the debt markets.

According to latest depository data, Foreign Portfolio Investors (FPIS) invested a net Rs 4,157 crore in equities during May 2-19, while they poured Rs 12,941 crore in the debt markets during the period under review, translating into a net inflow of Rs 17,099 crore ($2.66 billion).

This comes following a net inflow of close to Rs 94,900 crore in the last three months (February-april) on several factors, including expectations that BJP'S victory in recently held assembly polls will accelerate the pace of reforms.

Prior to that, such investors had pulled out over Rs 3,496 crore from debt markets in January.