It was a month ago that both IOC and BPCL were notified informally that they would be out of Petronet LNG to accommodate NTPC. However, ONGC and GAIL would stay on and, with NTPC, hold 16.66 per cent equity each in the company.

Sources say that the ministry of power had prevailed upon the ministry of petroleum and natural gas to include NTPC as a stakeholder in Petronet LNG. However, this would have meant diluting the stakes of the original promoters -- ONGC, IOC, BPCL and GAIL -- from 12.5 per cent to ten per cent apiece.

Eventually, the petroleum ministry came to the conclusion that it made more sense to have three players with synergies in LNG which meant that BPCL and IOC were out of PetronetLNG. NTPC had, in fact, been seeking a 26 per cent stake on the grounds that it would eventually be the biggest consumer of LNG. However, this did not find acceptance with the PSU representation in Petronet LNG.

Though no official communication was made to the two oil companies on their exclusion, IOC was reportedly unhappy with the state of developments and protested against the move. The PSU was of the view that even with NTPC's inclusion, there was no reason why it had to be the "scapegoat." IOC had also reiterated that LNG was going to be an important focus area in the future and that expertise in this field could always be sourced from ONGC, with whom it has entered into a strategic alliance for several petro-related activities.

There has been no indication of BPCL's reaction to the proposed ouster from the company though the grapevine has it that the PSU has decided to adopt a "wait-and-watch attitude." With the political uncertainty in New Delhi likely to continue for a while now, NTPC's entry toPetronet LNG may take longer than expected especially if there is a change in priorities among the ministries concerned -- power and petroleum. Interestingly, there was a proposal to offer both IOC and BPCL equity participation in Petronet's subsidiaries -- Petronet Dahej and Petronet Cochin -- in the event of their being dropped from the holding company. Further developments on this front are not known.

Petronet LNG was formed last year to cater to creation of infrastructure for imported LNG in the country. This was largely a result of the recommendations of the R-group, a committee set up by the ministry of petroleum1 and natural gas in 1995.

To quote the report: "The technology of production of LNG, its transportation and setting up of LNG terminals is a proven one, whereas technology for laying deep-sea pipelines is still to be fully established. In addition, landing of west Asian in the western region and its transportation to the southern region may make imported gas more expensive than LNG atcoastal locations in southern India."