Diversified Adani group is looking to pick up a majority stake in gas distributor Gujarat Gas, an official said, as it looks to expand presence in the country's fast-growing city gas business.
Adani is among 6 to 7 bidders in the fray to buy 65 per cent stake in the western India-focused gas distribution company from the Indian unit of UK's BG Group Plc (BG.L), in a deal valued about $900 million, sources told Reuters last month.
"We are evaluating BG's stake in Gujarat Gas. If this acquisition comes through, it will synchronise with our existing city gas business," group spokesman Ameet Desai told reporters.
Gujarat Gas supplies piped and compressed natural gas to customers across Surat, Bharuch and Valsad in the western state, and operates a 3,700 kilometre-long gas pipeline network there.
Adani itself operates city gas networks in Ahmedabad and Vadodara in Gujarat, and Faridabad in north India.
The group, led by billionaire Gautam Adani, has grown rapidly beyond its commodities trading business under Adani Enterprises over the past decade. It now includes utility Adani Power, and port operator Adani Port and Special Economic Zone.
The group is looking to expand presence in the oil and gas business by commercially developing its exploration blocks in India and Thailand, and has planned setting up a liquefied natural gas terminal in India.
"We see clearly a linkage of the oil & gas part of business with the city gas distribution going forward," Desai said.
India's current gas demand of 166 million cubic metres a day (mscmd) is projected to rise to 443 mscmd by 2017, due to the growing number of power plants, industries and vehicles in Asia's third-largest economy.
Adani expects to invest a total $6 billion in the Galilee coal project by 2015, Chairman Gautam Adani said, which includes spending on expanding the coal terminal capacity, capital expenditure on mining, and on building a rail link.
The group, which is the largest importer of coal to India, last year acquired stake in Australia's Galilee coal project for $2.7 billion and paid another $2 billion to buy the Abbot Point coal terminal in the country.
The deals will allow it to tap growing coal traffic in overseas markets and also help ship coal from Galilee to its power plants in India, where it currently has operational capacity of 4,000 megawatts and plans to raise this to 20,000 MW by 2020.
"Our own ambitions in energy sector will justify our stakes in Australia. Even if the domestic power situation improves, it will not make a difference to our plans," Desai said, adding the group will not look beyond coal in the mining space till 2015.
India holds 10 per cent of the world's coal reserves, but a shortfall in local supplies has grown rapidly due to rising coal-fired power plant capacity and environmental and land acquisition delays for mining projects, forcing expensive imports.
The country is likely to import about 135 million tonnes of coal in 2011/12.
The Adani group now plans to focus on its three main businesses of natural resources, ports and special economic zones, and power generation and gas distribution, Desai said.