State-run refiner Indian Oil Corp said on Friday its board has given its in-principle approval to acquire a stake of up to 50% in GSPL LNG Ltd, a joint venture of Gujarat State Petroleum Corporation and Adani Enterprises Ltd.
GSPL LNG is setting up a liquefied natural gas terminal with capacity of 5 million metric tonnes per annum at Mundra Port in Gujarat at a cost of about Rs 5,040 crore, Indian Oil said in a statement.
The statement didn’t specify any deal value. It also didn’t say what stake GSPC and Adani will hold in the joint venture after the transaction. The Press Trust of India reported, citing an official it didn’t identify, that Indian Oil will pay an estimated Rs 750 crore ($118 million) for the stake.
The terminal, to be commissioned in the fourth quarter of 2017-18, will have receipt, storage and re-gassification facilities for LNG. It will be connected to Gujarat State Petronet Ltd’s existing pipeline network at Anjaar in Gujarat.
Both GSPC and Gujarat State Petronet are owned by the Gujarat state government. Indian Oil is a central government-owned firm. Adani Enterprises is the flagship company of the billionaire Gautam Adani’s eponymous conglomerate.
Indian Oil said that, as the second-largest player in natural gas in the country, it is making significant investments in natural gas infrastructure and marketing in line with the country’s changing energy mix.
“We already have investments across the gas value chain, from LNG import terminals to city gas distribution networks, the major among them being a 5 MMTPA LNG import terminal at Kamarajar port near Chennai, scheduled for commissioning in 2018-19,” IOC chairman Sanjiv Singh said.
Mundra is the second LNG terminal where Indian Oil is joining hands with Adani Group. Last year, Indian Oil and state-run gas distributor GAIL India Ltd had agreed to acquire a 49% stake in Adani’s Dhamra LNG terminal in Odisha, on the country’s east coast.
It is also another instance of a central government company buying into a Gujarat government company. Earlier on Friday, Oil and Natural Gas Corp, India’s biggest explorer, said it had bought an 80% participating interest in one of the offshore blocks of GSPC in Krishna Godavari Basin, off India’s east coast.
The deal, announced in December last year was controversial as it was being seen as a bailout of GSPC, which is burdened with massive debt, by a central government-owned company.