Business Daily from THE HINDU group of publications
Sunday, Jul 09, 2006
Business Daily from THE HINDU group of publications Sunday, Jul 09, 2006 |
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Petroleum Industry & Economy - Foreign Direct Investment Corporate - Alliances & Joint Ventures British Gas plan put on hold Ambarish Mukherjee
New twist BG planned $90 m investment for setting up subsidiaries in three States BG had sought permission from the FIPB for developing gas distribution and transmission infrastructure
New Delhi , July 8 The Government has put on hold British Gas' (BG) proposal to invest $ 90 million in India for setting up three wholly owned subsidiaries , one each in Andhra Pradesh, Tamil Nadu and Karnataka with an investment of $30 million in each State. The Government has sought the opinion of BG's existing Indian joint venture partner, GAIL (India) Ltd ,on BG's proposal and whether the public sector company had any objection if the foreign firm went alone in the three States. Though the Government earlier did away with the mandatory requirement of obtaining a No Objection Certificatefrom the Indian joint partner by the foreign firm, in case it wanted to set up another company through Press Note 1 of 2005, Government approval is still necessary for all new proposals by companies that have an existing joint venture, technology transfer/trademark agreement in the same field. It is at this point that the FIPB can use its discretionary powers to ascertain whether the opinion of the Indian partners are necessary or not, which is what it has done in this case. BG had sought permission from the Foreign Investment Promotion Board for developing gas distribution and transmission infrastructure in these three States as well as carrying out distribution, supply and sale of piped natural gas (NG) to domestic, commercial and industrial customers and compressed natural gas (CNG) used in running vehicles.
Nod from Ministry
The BG move followed a change in Centre's FDI policy in February this year allowing 100 per cent FDI in laying natural gas/LNG pipelines and for companies setting up infrastructure relating to marketing of petroleum and natural gas. The BG proposal has already received the go-ahead from the Ministry of Petroleum and Natural Gas, subject to the conditions that there would be no commitment on theGovernment's part for supplying natural gas or LNG to BG subsidiaries and that the activities of these three new companies should not have any conflict of interest or jeopardise the activities in the company's two joint ventures in Maharashtra and Gujarat. It is on the issue of conflict of interest with existing partners that the FIPB has stopped the clearance of the proposals. Though BG had not sought NOC from GAIL, it informed FIPB that these three companies would have no impact on its other two subsidiaries, namely Mahanagar Gas Ltdand Gujarat Gas Company Ltd because they would cater to limited geographical scopes of the proposed new companies. Officials pointed out that the FIPB did not buy BG's argument and hasdeferred a decision on BG's plan till GAIL comes out with a clear view on what it wanted.
Related Stories: More Stories on : Petroleum | Foreign Direct Investment | Alliances & Joint Ventures
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