ADB and German Development Bank KfW had recently approved a loan of 169 million dollars to Petronet for its expansion projects at Dahej and new terminal at Kochi, but the multilateral lending agency's internal norms prohibit it from having both debt and equity exposure in a given company.
In 2004, ADB had sanctioned $75 million loan to Petronet. But once it took 5.2% stake for less than $8 million, ADB could not disburse the balance due to its internal regulations, Petronet CEO and managing director Prosad Dasgupta said.
ADB norms also stipulate it to divest its equity holding in a company three years from the date of the company going public. Petronet's IPO came in 2004 and ADB was supposed to exit Petronet in 2007, but 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 year end, he said. Who they sell it to is none of our business. Though Dasgupta refused to say if Mittal was interested in ADB stake in Petronet, industry sources say Mittal was keen but would first want company promoters GAIL India, Indian Oil, Bharat Petroleum and ONGC to waive their pre-emption rights.