Adani pitches to buy 22.5% stake in Green Gas

Vol 15, PW 1 (14 Jul 11) People & Policy

Adani Gas (formerly Adani Energy) is set to buy a stake in Uttar Pradesh-based gas retailer Green Gas, promoted by GAIL and IndianOil.

PETROWATCH learns Adani has been talking to GAIL and IOC for nearly a year but finally decided to go ahead with the deal in March only. “Adani wants a 22.5% stake in Green Gas,” confirms a source.

“They (Adani) have sent a draft copy of the deal to the GAIL and IOC boards. Approval is expected by the end of this month (July).

” Another source disputes the 22.5% figure, saying the size of Adani’s stake has yet to be finalised. IOC and GAIL currently own 22.5% each in Green Gas, while the Aditya Vikram Birla Group and financial institutions IDFC and UTI together hold 50%.

Green Gas was incorporated in 2005 to sell CNG and piped gas in Agra and Lucknow. In the same year Adani also began setting up a retail gas network in Lucknow after it was awarded a No Objection Certificate (NOC) by UP authorities.

Adani spent nearly Rs60cr ($13.4m) to lay 48-km of steel pipeline and 12-km of plastic pipeline in Lucknow but was forced to stop work in 2009 because of its inability to source gas and an intervention by the Petroleum & Natural Gas Regulatory Board. With this deal, hopes are high Adani can finally revive it defunct gas pipeline network in Lucknow and merge it with the Green Gas pipeline network.

“(Merchant banker) SBI Caps will evaluate the ‘investment’ made by Adani in Lucknow and determine its present value,” we hear. “Once that’s done both sides will mutually decide what stake Adani should be given in Green Gas.

” Adani expects it will learn how much it needs to pay for its 22.5% stake in Green Gas only by October this year.