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Tuesday, Aug 19, 2003

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British Gas wants to retain 50% stake in joint venture arm

Ambarish Mukherjee

New Delhi , Aug. 18

BRITISH Gas Plc (BG) has decided to retain its 50 per cent holding in its Indian joint venture gas distribution subsidiary Mahanagar Gas Ltd (MGL). The other joint venture partners are Gas Authority of India Ltd (GAIL) and the Maharashtra Government.

Originally, BG was supposed to bring down its holding in MGL to 35 per cent by the end of this year through a public issue. Now, the company has informed the Foreign Investment Promotion Board (FIPB) that it wanted to retain its holding till December 2005.

MGL has stated in its application filed with FIPB that present market condition is not conductive for the public issue of the size that MGL is expected to float as the capital market is yet to gain the confidence level of domestic and international investors. The company has also sought FIPB's permission to permit its board to decide the timing, manner and the size of the public issue as per the requirements of the company.

The company has also stated that since it is planning to expand its area of operations beyond Greater Mumbai, it is likely to take some time in getting necessary approvals as well as taking up the expansion projects. MGL has stated that it wants to go public only after the expansion plans have crystallised.

MGL currently provides gas connection to households as well as industries in and around Mumbai. As of now, it provides connection to around 1,70,000 households and has also constructed 47 CNG stations.

BG is emerging as a major player in the Indian gas sector. The company has already acquired Enron's Indian exploration and production interests. It also has a 65 per cent stake in Gujarat Gas Ltd. It is also the sole promoter of the proposed Pipavav LNG importation and regasification terminal in Gujarat.BG also has a 30 per cent interest in the Tapti gas field and the Panna/Mukta oil and gas fields, and a 62.64 per cent interest in the CB-OS/1 exploration licence. The partners in the Panna/Mukta and Tapti fields are Reliance Industries Ltd (30 per cent) and ONGC (40 per cent) while in CB-OS/1 the partners are Hindustan Oil Exploration Company, ONGC and Tata Petrodyne Ltd with interests of 17.36 per cent, 10 per cent and 10 per cent respectively.

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