IndianOil to end gas love affair with Adani

Vol 20, PW 6 (01 Dec 16) Midstream & Downstream
     

Often in dysfunctional relationships, there comes a time when one partner decides he or she has had enough and is better off alone.

As with Angelina Jolie and Brad Pitt it is now likely to happen between IndianOil and Adani Gas. This report learns IOC is thinking of bidding independently of Adani in future gas licensing rounds like the eighth one announced on November 22 and has asked Dharmendra Pradhan for his blessings.

"We're awaiting the go ahead," says IOC. What has led to the imminent split? First IOC is inspired by how tiny players like IRM, Unison, Mahesh and Perigon have won authorisations on their own.

"IOC started asking itself why a big company like itself needs a private partner for city gas?" says a gas retailer. "Narendra Modi too has been stressing that state-owned companies should function independently." Add the friction that resulted in March when the gas regulator rejected Adani's claims to a gas network in Lucknow in favour of Green Gas - IndianOil's JV with GAIL Gas.

Cost-conscious Adani also felt IOC was acting foolishly by quoting huge performance bank guarantees to win cities like Ernakulam in Kerala where it offered a Rs4248cr ($639m) guarantee. "You quote such a big guarantee when you are sure of good business," says a gas retailer.

"But to quote such an amount when you aren't sure is foolish!" An email sent to IOC's official spokesman went unanswered.