Gaz de France wants minimum 17.5% of Petronet-LNG

Vol 4, PW 4 (29 Mar 00) Midstream & Downstream

For a company that has waited three frustrating years and already spent $5m in development costs, it is not too much to ask.

Gaz de France - strategic partner of Petronet-LNG in India - wants nothing less than a 17.5% equity stake in the holding company. "Three years is a long time to wait," a senior GdF executive in Paris tells this report, "We realise that 26% is no longer possible but anything under 17.5% is unacceptable." With luck, the French company won't have much longer to wait.

Subbaram Narayan - oil secretary and Petronet-LNG chairman - is shortly expected to make an announcement that should resolve one of the most contentious issues facing his new company: how to divide equity fairly among the partners. A source at Petronet-LNG confirms that agreement on the division of 50% equity among five state-owned companies is now only a formality.

"NTPC has to sign an MOU and Joint Venture agreement with the other partners." But he adds: "Debate is still continuing on how to divide the other 50% among private participants." One of the major obstacles to agreement is a promise to grant 5% equity to a state-owned Gujarat government company out of the 50% reserved for private sector companies. GdF, RasGas (the LNG supplier) and a Mumbai power company (BSES) have all been promised a stake.

The following breakdown illustrates who is expected to win a place in a revised Shareholder Agreement. Theequity figures marked for private sector companies are subject to confirmation by the government.

Public Sector Units 10% Indian Oil Corporation 10% Bharat Petroleum Corporation 10% Gas Authority of India 10% Oil & Natural Gas Corporation 10% National Thermal Power Corporation Private Companies 17.5%* Gaz de France 17.5%* RasGas 10% Bombay Suburban Electricity Supply 5% Government of Gujarat *GdF and RasGas might divest 7.5% each to Asian Development Bank and International Finance Corporation