State-run oil marketeer Hindustan Petroleum Corp. Ltd (HPCL) could buy a 5.2% stake in Petronet LNG Ltd that is currently held by the Asian Development Bank (ADB).
“We will put a note to the government, and if it approves, we will look at it,” HPCL chairman and managing director Subir Roy Choudhury said on Thursday.
In a letter to the Indian government in August, Manila-based ADB had expressed its intention to sell its 39 million shares in Petronet, valued at Rs.433.48 crore, based on Friday’s closing price of the company’s shares on the Bombay Stock Exchange (BSE).
ADB is also reported to have written to Petronet’s other promoters—Indian Oil Corp. Ltd (IOC), Oil and Natural Gas Corp. Ltd (ONGC), GAIL India Ltd and Bharat Petroleum Corp. Ltd (BPCL)—offering them its stake, while Oil India Ltd and Indraprastha Gas Ltd are said to be interested as well.
However, any state-run company wishing to acquire ADB’s stake will run into a contractual wall.
While the government already owns 50% in Petronet through IOC, BPCL, GAIL and ONGC, the articles of association of the company stipulate that its shareholding cannot exceed half of Petronet’s equity, as this would give it a public sector unit status.
GDF International SA, an arm of GDF Suez, the French energy group, holds a 10% stake in the firm, while the rest is publicly held.
Owning a stake in Petronet is in line with HPCL’s ambitions of having a presence in the liquefied natural gas (LNG) market.
In an interview to Mint in August, Roy Choudhury had termed the missing out on LNG as a “lost opportunity” and said that building a presence in that market would be a part of their strategy where they could either work with partners or independently.
Petronet’s shares outperformed the benchmark Sensex index on Friday, gaining 5.11% to close at Rs.111.15 apiece, while the Sensex gained 0.91%. HPCL’s shares lost 0.07% to close at Rs.533.50.
On Thursday, Roy Choudhury, who took over as HPCL chairman in August, said the company was planning capital expenditure of Rs.4,000 crore to strengthen its retail network and expand into businesses such as city gas distribution.
Speaking after HPCL’s annual general meeting, its director (finance) Bhaswar Mukherjee said the oil marketing company would look at offering a public issue of HPCL-Mittal Energy Ltd (HMEL), the joint venture with Mittal Energy Investment Pte Ltd promoted by UK-based businessman L.N. Mittal.
The public issue would be made only after the joint venture’s 9 million tonnes per annum refinery in Bathinda, Punjab, is commissioned.
Both HPCL and Mittal Energy hold 49% each in HMEL, while some financial institutions hold the rest.
“We will look at an IPO (initial public offering) for HMEL after seven-eight months when the refinery is constructed. At present, the debt required for constructing the refinery has been tied up, and is being drawn on,” Mukheree said.
He added that a part of the debt is being converted into foreign currency to save on interest costs.
Source: Livemint