World Bank affiliate IFC wants a stake in GSPC Gas

Vol 12, PW 8 (04 Sep 08) People & Policy
     

World Bank affiliate International Finance Corporation is the latest in a line of suitors for Gujarat-based city gas retailer GSPC Gas.

PETROWATCH learns that “general discussionsâ€‌ with IFC began recently over its interest in acquiring a minority stake in GSPC Gas, a wholly owned subsidiary of GSPC. “The actual percentage is yet to be discussed,â€‌ we hear.

Over the past 18 months several companies have shown interest in GSPC Gas, whose assets include 20 CNG stations and a 110-km long steel and 1200-km long polyethylene pipeline network that supplies piped gas to at least 350 industrial customers and about 25,000 households. Among them are state-owned BPCL, IOC and investment banks IDFC Private Equity and state-owned Small Industries Development Bank of India.

But according to Gujarat sources, none are being considered seriously - except IFC. “Officially, we’ve yet to say â€کno’ to the others, but those discussions are no longer valid,â€‌ he says.

“A year and a half back when we began discussions to sell equity in GSPC Gas, the company was selling just 100,000 cm/d. Today it is selling 1.3m cm/d.

â€‌ All the earlier discussions with companies other than IFC, we hear, have not concluded but, “are of no significance any longer because volumes and prices discussed then are no longer valid given the rapid growth in the operations of GSPC Gas.â€‌ Gujarat authorities, it seems, favour IFC over the others, not least because it is an international organisation that can, “pitch in with a higher priceâ€‌.

But money is not the only driver. “There’s no shortage of investors,â€‌ we hear.

“What’s important is that IFC can bring an international perspective to the table. It has exposure to CGD operations in other parts of the world and this will be useful to GSPC Gas.

â€‌ If selected, IFC could win a seat on the board but most expect it to take a back-seat role on day-to-day operations. Any decision to sell equity in GSPC Gas to IFC rests with Gujarat’s politicians.