| Asian Development Bank (ADB) is likely to exit Petronet LNG Ltd by selling its 5.2 per cent holding in the country’s biggest liquefied natural gas importer possibly to promoters or billionaire Lakshmi Mittal. |
| ADB and German Development Bank KfW had recently approved a loan of $169 million to Petronet for its expansion projects at Dahej and a new terminal at Kochi. However, ADB’s internal norms prohibit it from having both debt and equity exposure in a company. |
| “In 2004, ADB had sanctioned a loan of $75 million to Petronet. But once it took a 5.2 per cent stake for less than $8 million, ADB could not disburse the balance of the loan due to its internal regulations,” Petronet CEO and Managing Director Prosad Dasgupta told the Press Trust of India. |
| ADB norms also stipulate that it must divest its equity holding in a company three years from the date of the company going public. Petronet had an initial public share sale in 2004 and ADB was to exit Petronet in 2007, but it was persuaded to stay on for a year. |
| Now with fresh debt, for which ADB and KfW have signed financing agreements, the Manila-based lending agency may exit Petronet by this year end, Dasgupta said. “Who they sell it to is none of our business.” |
| Though Dasgupta refused to say if Mittal was interested in buying ADB’s stake in Petronet, industry sources suggested that Mittal was keen, but that he would first want the promoters GAIL India, Indian Oil, Bharat Petroleum and ONGC to waive their pre-emption rights. |
| The four state-run companies that each hold about 12.5 per cent stake and their French partner GdF which has 10 per cent, have the first right of refusal on ADB’s stake. GAIL and IOC, it appears, are keen to pick up ADB stake, but they may not be allowed to do so by the petroleum ministry. |
| GAIL, IOC, BPCL and ONGC together hold a little less than 50 per cent in Petronet, which is why it is still not a public sector unit. |
| If the promoters were to pick up even half of ADB’s 5.2 per cent, and the remaining is taken by GdF, the company would become a public sector company, and that’s something the petroleum ministry doesn’t want, sources say. |
| Although the petroleum secretary is chairman of Petronet and the company enjoys state patronage, it has not been subject to the scrutiny that PSUs come under. |
| Dasgupta expects that a drawdown from ADB-KfW’s new debt would happen in September/October, when construction at Petronet’s Kochi terminal catches pace. |
| Petronet is expanding its Dahej terminal from 6.5 million tonnes to 10 million tonnes and constructing a 5 million tonne a year new LNG import terminal at Kochi, Kerala, by 2011. |
Source: Business Standard