SBI Caps values Adani pipeline network at $7.9m

Vol 15, PW 14 (26 Jan 12) People & Policy

Green Gas, an IndianOil and GAIL joint venture, is set to acquire the defunct gas pipeline network in Lucknow owned by Adani Gas.

PETROWATCH learns SBI Caps estimates that Adani’s 48-km steel pipeline and 12-km polyethylene (plastic) pipeline network in the city are together worth Rs39cr ($7.6m). “But this figure is yet to be finalised,” reports a source.

SBI Caps, he adds, should complete its evaluation of Adani’s gas network and submit its final report next month (February). In exchange, Adani wants a 20% stake in Green Gas under a deal that will see the two companies merge their Lucknow pipeline networks and allow Adani to appoint a director on the Green Gas board.

However, a final decision on what stake to offload in return for Adani’s investments will be taken only after Green Gas evaluates the SBI Caps report. Green Gas asked SBI Caps to arrange private equity for the remaining 50% stake in the company last year.

In July this year, Green Gas also asked it to evaluate the value of Adani’s investments in Lucknow. On the ground, Green Gas is expanding its pipeline network in the historic city, known for its important role in India’s ‘first war of independence’ against British rule in 1857.

So far Green Gas has laid 32-km of steel pipeline and 60-km of plastic pipeline through which it supplies gas to nearly 500 households. “We are also adding ‘spur’ lines to local factories and businesses,” adds a source.

“Securing gas for the city is difficult. This is why we haven’t yet aggressively targeted industrial and commercial customers.

” IOC owns 22.5% of Green Gas while GAIL owns 22.5%. Another 5% is set aside for the UP state government.