25% stake sale in GSPC-Adani LNG terminal to take longer


25% stake sale in GSPC-Adani LNG terminal to take longer

Adani Group and Gujarat State Petroleum Corporation (GSPC) Limited’s five million tonnes per annum (mtpa) liquefied natural gas (LNG) terminal at Mundra, Gujarat, will take a tad longer to build.

Adani Group and Gujarat State Petroleum Corp (GSPC) have been planning to set up a Rs 4,500-crore liquefied natural gas (LNG) import terminal at Mundra special economic zone (SEZ) in Gujarat by December 2016.

GSPC and Adani Group’s plan to sell 25% stake in the terminal has hit a roadblock as GSPC does not have a chief executive officer to grant approvals related to the deal.

“After D J Pandian, GSPC has been without a CEO. The request for proposal has not been made and we understand the deal may not happen this financial year,” said an official directly involved in the stake sale process.

A request for proposal (RFP) is a solicitation made often through a bidding process, by an agency or company interested in procurement of a commodity or service to potential suppliers to submit business proposals.

Last month GSPC’s CEO D J Pandian was elevated as the chief secretary of Gujarat. His elevation has left a vacuum at GSPC. Pandian is considered instrumental in building GSPC into a major player in oil and gas sector having presence in the entire value chain of hydro carbon sector.

Pandian was at the helm of affairs when GSPC developed an extensive gas grid network for transmission and distribution of natural gas throughout Gujarat.

GSPC would hold 50 percent stake in the project while Adani Group would take 25%. The project is to be financed in a debt to equity ratio of 70:30. The terminal capacity would be expandable upto 10 million tonnes per annum.

GSPC and Adani have zeroed in on to three players — IGS, Oil and Natural Gas Corporation (ONGC) and IndianOil Corporation (IOC).

If IGS bags the stake, it would be the company’s first venture in India after its formation in 2011. IGS was formed as a 50:50 joint venture between BP and RIL after BP bought a 30% stake for $7.2 billion in 21 oil and gas production sharing contracts in India, including the KG-D6 block.

The due diligence on the stake sale was completed last December and players were asked to submit commercial proposals based on capacity booking by January 15, 2014. The bids were to be opened in March and a final closure of the deal was to take place by June 2014. However, in the wake of elections in the month of May, the process was put off.

“The stake sale may not happen before next financial year as being government organisations, ONGC and IOC would need various rounds of approval,” said another official aware of the deal.

Those winning the bid would be required to pump in Rs 400 crore over a period of three years for the project. Last August, eight players filed an Expression of Interest (EoI) for the 25% stake. Other than the shortlisted players, the bidders included GAIL India, Petronet-LNG, Torrent Energy, Japan’s Mitsui & Co and Toyota Tsusho Corporation.

A company executive said Petronet LNG, despite its experience, was not short-listed as there could have been a conflict of interest. IOC and ONGC, on the other hand, hold 12.5% stake in Petronet-LNG. IOC is also setting up a five mtpa LNG terminal at Ennore, Tamil Nadu.

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