Bharat Petroleum beats HPCL for stake in GSPC Gas

Vol 11, PW 4 (28 Jun 07) Midstream & Downstream

Bharat Petroleum has beaten fellow state-owned oil companies Hindustan Petroleum and Indian Oil in the race to buy equity stake in GSPC’s retail gas subsidiary GSPC Gas.

GSPC now owns 100% of GSPC Gas but wants to dilute its stake, “so that new partners can come in with their unique strengthsâ€‌. We understand that GSPC management has sought “in principleâ€‌ approval from its masters in the Gujarat state government to reduce its stake.

GSPC has also informed Gujarat authorities that it intends to sell up to 50% equity in GSPC Gas. The rest will remain with GSPC and other Gujarat government companies.

Out of the 50% on offer to outsiders, says a source, 20% will be for Bharat Petroleum and 30% to financial institutions IDFC, SIDBI and ICICI. State government approval is still awaited but GSPC does not see any hurdles.

“BPCL made an offer to us for equity in GSPC gas,â€‌ says a GSPC source. “They have been interested since a long time.

â€‌ Unlike BPCL, which proactively sought a stake in GSPC Gas, the three financial institutions were invited by GSPC to buy equity. Hindustan Petroleum too was interested in GSPC Gas also, but Bharat Petroleum submitted an offer first.

Why does GSPC prefer Bharat Petroleum “BPCL is a central government company and it will bring gas (from its share of Dahej R-LNG),â€‌ says our source. “BPCL has a letter from the government of India granting permission to join hands with us (GSPC) in Gujarat.

â€‌ BPCL has a 12.5% stake in Petronet-LNG and is firmly entrenched in the gas business selling R-LNG from Dahej. But HPCL hasn’t lost hope that it might also be allowed a slice of GSPC Gas.

“We feel the (oil) ministry will work out some formula by which HPCL and BPCL together can have equity in GSPC Gas,â€‌ says a HPCL source.

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