Friday, August 31, 2012

Halal by Dalal!

Adani And Torrent Stopped From Bidding For BG Stake In Gujarat Gas

Did Gujarat government arm-twist two of the state's biggest corporate houses to desist from bidding for Gujarat Gas Company Ltd? Days before the bidding closed to buy 65.12% stake of British Gas (BG) in Gujarat Gas, a group of top bureaucrats summoned Gautam Adani of Adani group and Sudhir Mehta of Torrent group. Both Adani Power and Torrent Power were in the race for Gujarat Gas. The bureaucrats conveyed to Adani and Mehta the wishes of minister of state for energy Saurabh Dalal that they should not bid.
    Eventually, a consortium led by Gujarat State Petroleum Corporation emerged as the sole bidder to buy British Gas' stake in Gujarat Gas for Rs 3,000 crore. When asked if the state government pressurised Adani and Mehta to back off at the eleventh hour, Dalal said, “Whatever be the case, we have not done anything against the interest of Gujarat government.”
    Gujarat Gas distributes gas in three major cities, Surat, Bharuch and Ankleshwar. This would have been a good buy for Adani, who supplies gas in Ahmedabad and other regions. Ditto for Mehta who supplies electricity in Surat.
    Other members of the GSPC consortium are Oil and Natural Gas Commission (ONGC) and Bharat Petroleum Company Ltd (BPCL). While GSPC is 50% partner in the consortium, ONGC and BPCL have 25% stake each.
    Informed sources said the GSPC is likely to clinch the deal at around Rs 300 per share while both Adani and Torrent were willing to pay upwards of Rs 400. Earlier, BG had refused to sell its stake at a low rate but it has come around, given the government's aggressive tactics. The current market price of the GGCL's share is Rs 311, though it was above Rs 450 when BG announced its decision to withdraw from GGCL in November 2011.
    Incidentally, BG's decision to withdraw from GGCL is related to Gujarat government's complaint to the Competition Commission of India (CCI) against “overcharging” consumers in Surat, its biggest market. The state government filed the case with the CCI after GGCL raised gas prices in Surat, leading to protests by local textile entrepreneurs. In August 1997, the BG Group acquired GGCL, then co-owned by Gujarat government and the Mafatlal Group, for Rs 170 crore.