HYDERABAD: Petronet LNG, India's largest gas importer, is likely to offer equity stakes to a port owner and the Andhra Pradesh government in a liquefied natural gas terminal project it is building near Visakhapatnam.
For Petronet LNG, which owns two other LNG terminals, the Andhra Pradesh project would be the first one in which it could cede a stake to investors.
The proposed terminal at Gangavaram Port will be the first one on India's east coast. Petronet LNG operates an LNG terminal at Dahej in Gujarat with a capacity of 10 million tonne and another one with half that at Kochi in Kerala.
DVS Raju, chairman and managing director of Gangavaram Port, said Petronet LNG has responded "positively" to their request for buying an 8-10% stake in the special purpose entity setting up the terminal.
“Petronet LNG said the matter is being referred to its board for approval,” he told ET.
AK Chopra, the spokesman for the gas importer, said a final decision is awaited. State-owned oil companies BPCL, GAIL, IOC and ONGC own 12.5% each in Petronet LNG.
Gangavaram Port, the country's deepest seaport, is backed by private equity firm Warburg Pincus with a 30% stake, while the DVS Raju-led promoter group owns 59.5% and the Andhra Pradesh government 10.5%.
The LNG terminal project will have a capacity of 5 million tonne and is due to start operations in 2016. Involving an investment of Rs 4,500 crore, Petronet LNG expects to achieve financial closure for the special purpose entity implementing the project in six months.
The state government has also sought a minority stake in the project to enable it to have a say in gas pricing and making fuel available for industry, said Sutirtha Bhattacharya, principal secretary for energy. "Even if Petronet LNG offers a stake only to Gangavaram Port, being a 10.5% owner in the port, the AP government will gain minority stake in the project vehicle indirectly," he said.
Petronet LNG has agreed in principle to offer a stake to Gangavaram Port at par, said Raju. To own 10% in the project, Gangavaram Port may have to invest up to Rs 135 crore at a debt-equity ratio of 70:30.
For Reprint Rights: timescontent.com
Copyright 2012 Bennett Coleman & Co. Ltd. All Rights Reserved.
(Originally published May 6, 2012, in The EconomicTimes.)