BRITISH GAS: LOOKING FOR A STAKE IN GAIL
Its official.
British Gas is serious about acquiring stock in the Gas Authority of India (GAIL), the countrys monopoly gas distributor. If and when it succeeds, it will make history in becoming the first foreign multinational to acquire an equity stake in a state-owned Indian energy company.
That in itself is some achievement. Unfortunately, British Gas may have to wait longer than expected.
On 6 February Indias Foreign Investment Promotion Board (FIPB), rejected a proposal by British Gas (India) Private Ltd to buy shares in the government's partial privatisation of GAIL, currently underway. Included in the proposal was an application by BG (India) Private Ltd to increase its capitalisation to $100m.
This was approved. Notably, the FIPB did not rule out BGs future participation in any sale of GAIL stock.
"They left it open for us to return at some future date", a company source tells this report. In some ways, BG can claim unfair treatment.
When it first submitted its application, government regulations were clear: corporates could take part in the limited auction of GAIL stock. By the time FIPB officials got round to examining BGs application, the rules had changed: corporates could no longer take part.
The question now is: what is BGs end-game in acquiring a stake in GAIL For cynics, the answer is clear: to acquire a seat on the board of a company with whom it already has a successful gas joint venture: Mahanagar Gas Ltd; and second - by default - to take advantage of GAILs 12.5% stake in BGs arch rival: Petronet-LNG.