The ADB on August 23 last year offered to sell its 5.2 per cent stake in PLL, in which GAIL, Indian Oil (IOC), Bharat Petroleum (BPCL) and Oil and Natural Gas Corp (ONGC) hold 12.5 per cent stake each and have a first right of refusal.
The board of all the four promoter companies approved exercising the first right of refusal over ADB stake and cash buyout of the multilateral lending agency’s interest.
However, the ministry, whose Secretary is the Chairman of PLL, vetoed the proposal at a March 26 meeting as it wanted the company to continue as private firm that does not attract audits by CAG or come under purview of CVC, sources said. The boards of IOC, ONGC and BPCL, they said, have agreed to forego their pre emption rights and have reversed their previous decision to acquire ADB stake.
GAIL, which had been spearheading the move to acquire ADB stake, has however not yet waived its pre emption rights.
“Keeping in view the specific approval of the Cabinet on restricting the aggregate Government/PSU participation to 50 per cent of paid up capital for providing the desired flexibility to Petronet to operate in a dynamic LNG import market, the existing shareholding structure in the context of PSU participation, should be retained,” minutes of the March 26 meeting stated.
If the ADB stake goes to state firms, PLL would come under scrutiny of official auditor CAG and CVC because of PSU holding exceeding 50 per cent, something that the company and the ministry was opposed to.
The ministry has instead asked the PSUs to offer the ADB stake to a strategic investor, like am LNG supplier, they said.
Sources said the ministry is keen on offering the ADB stake to Qatar in lieu of getting an additional 4 million tons a year of LNG supplies on a long term contract.
But companies like GAIL are opposed to the idea unless Qatar agrees to sell LNG at a discount to its current asking price of an equivalent to 14.5 per cent of the ruling global oil price, which translates into over four times the predominant domestic price of $ 4.2 per million British thermal unit.
Gaz de France International (GDFI) holds a 10 per cent in Petronet and also has the right of first refusal over ADB’s stake. But the French energy giant has decided to waive this off.
ADB’s 5.2 per cent stake was to be split equally among the four PSU promoters.