Enron and British Gas buy into Gas Authority of India (GAIL)

Vol 3, PW 21 (10 Nov 99) People & Policy
     

Who said it is not possible for a multinational to buy an equity stake in a nationalised Indian oil and gas company Until now the very idea has been tantamount to blasphemy.

The fact that it has happened, unnoticed and with hardly a murmur of protest, suggests theres hope yet for foreign companies with an eye on equity in Indias nascent privatisation programme. On Monday, 8th November, British Gas and Enron - two companies with aggressive and often competing ambitions for the Indias oil and gas sector - both confirmed to Petrowatch that they have each acquired approximately 5% of the 22.5m Global Depository Receipts (GDR) put up for sale by the Gas Authority of India (GAIL), the state-owned monopoly distributor.

Fund managers Templeton and Fidelity are also reported to have picked up significant quantities. The low-key flotation, which now sees GAIL stock traded on the London Stock Exchange, brings down Indian government ownership of the company from 83.3% to 67.3%.

For commercial reasons, neither British Gas or Enron have revealed the price agreed for their respective purchase. In many ways the question is irrelevant.

The real significance lies not in the price but in the fact that the purchase was allowed to happen at all. In India, multinationals have traditionally been viewed with mistrust, bordering on paranoia.

The fact that Enron and British Gas - two high-profile multinationals - have been allowed to acquire minor chunks of a major domestic corporation under the nose of a supposedly Swadeshi right-wing nationalist government is evidence that such hostility is declining. True, the Indian government still retains a majority stake in GAIL, and neither Enron or British Gas will have a seat on the board.

But how long before that changes