British Gas might have finally blinked on the Gujarat Gas issue. According to sources from the consortium led by Gujarat State Petroleum Corp (GSPC), it has agreed to lower its asking price from Rs 4,500 crore.
“BG has proposed a new price to us but we have to discuss this with members and take a call,” said a senior member of the consortium, requesting anonymity, as the companies were still in discussion. He did not disclose the price BG had quoted, but said this was closer to what GSPC and its consortium members had earlier offered.
Beside GSPC, the consortium has Oil and Natural Gas Corp and Bharat Petroleum. It had offered between Rs 3,800 crore and Rs 3,900 crore for the 65.12 per cent stake in Gujarat Gas.
Gujarat Gas has a market cap of Rs 3,828 crore. This implies BG’s stake of 65.12 per cent is valued at Rs 2,492.7 crore. BG’s asking price so far has been around Rs 4,500 crore for sale of its stake. The member added officials from BG and the GSPC-led consortium were to meet this month to finalise the details. “If the consortium agrees to BG’s new pricing, the deal should be sealed shortly,” the member added. The last meeting between the two companies took place in April, where BG and GSPC could not reach a conclusion on the matter of valuation. BG India’s spokesperson could not be reached for a comment.
Last month, in an emailed response, BG had said: “We confirm that formal and final bids for BG Group’s interest in Gujarat Gas closed on Thursday, March 15. As the process is still under way, it is not appropriate for us to comment further at present. We will inform the market when we have something to announce.”
GSPC spokesperson did not reply to the calls made. GSPC holds 50 per cent stake in the consortium, while ONGC and BPCL hold 25 per cent each. Oil India Ltd, will get five per cent stake from ONGC and BPCL each if the deal goes through.
Though analysts had said the Delhi high court’s ruling in favour of city gas utility Indraprastha Gas Ltd (IGL), in its case against the Petroleum & Natural Gas Regulatory Board (PNGRB), might benefit the valuation of Gujarat Gas, the company’s scrip did not show much change. Gujarat Gas’ scrip between June 1, when the order was passed, and June 8, had fallen 10.5 per cent. On June 1, it closed at Rs 333.55 and on June 8, it closed at Rs 298.50.
IGL had moved court after the gas regulator asked it in April to cut its network rate by 63 per cent. Also, in a retrospective decision, PNGRB asked the company to refund the difference to its customers for the period from April 1, 2008, until the date of issuance of the order. However, if PNGRB exercises the option to approach the apex court against the verdict, the case may take quite some time to resolve.