GAIL wants to renegotiate Indigas joint venture

Vol 4, PW 20 (08 Nov 00) Midstream & Downstream
     

If only things were progressing as fast in negotiations between TotalFinaElf , Gas Authority of India and the Tata Group on the shareholder agreement for the 'India Natural Gas Company (Indigas).' Unfortunately they are not.

Total and the Tatas are in talks with GAIL for its inclusion in 'Indigas', where Total and the Tatas hold 50% each. A source tells Petrowatch talks have stumbled on GAIL's insistence on renegotiating "two or three clauses" in the shareholder agreement, which would see the monopoly Indian gas company enter with a 33.3% stake.

Our source refuses to elaborate on the exact nature of the GAIL demands, except to say that they relate to the "organisation of the entire project." GAIL's insistence on renegotiating these clauses is causing irritation at Tata and Total. "This is an exisiting shareholder agreement between Total and the Tatas," we learn, "Sometime we are tempted to tell them to take it or leave it!" This irritation is unlikely to result in a breakdown of talks.

It is this report's understanding that Total and the Tatas are ready to "make some small concessions" to GAIL to maintain good relations and close the deal fast, possibly before Christmas. Total and the Tatas see GAIL's demand to re-work the shareholder agreement as little more than a routine time-wasting exercise not unusual for Indian public sector companies unaccustomed to the concept of meeting deadlines.