HPCL may pick up BG?s stake in MGL

Currently, British Gas and GAIL both hold 49.75% stake each in the joint venture.

Says the chairman and managing director, HPCL, Arun Balakrishnan, in a recent letter to petroleum secretary, MS Srinivasan, ?We have reliably learnt that M/s British Gas Group of UK, a JV partner of GAIL in MGL is considering the option of exiting from MGL. Since we (HPCL) have no presence in any metro city gas distribution, we see a huge opportunity for us in partnering with GAIL.?

Seeking the petroleum ministry support in nominating HPCL as the preferred partner in MGL, in case British Gas disinvests, Balakrishnan said, ?Our retail network can provide adequate infrastructure support to the JV thereby ensuring higher customer satisfaction.?

Asked to comment, BG India?s spokesperson said, ?This is all speculative and BG does not comment on speculations.? However, banking sources confirmed that following gas supply constraints, MGL has been picked up by BG for a valuation exercise. A preliminary exercise carried out by bankers have put the company’s valuation at close to $550 million. This, too, BG said was part of its routine annual exercise of valuation of certain assets and for which MGL has been picked up this time by the group. ?There is nothing more than this and its all speculations,? the spokesperson said. MGL is the only gas distributor in Mumbai and has been facing gas supply constraints for further distribution. The company procures around 1.2 standard cubic meters of gas per day from ONGC’s Uran gas processing terminal. However, with dwindling gas production on the western offshore, MGL has been facing gas supply constraints. On its part, HPCL has been jointly working with GAIL in city gas distribution projects in Andhra Pradesh, Madhya Pradesh and Rajasthan. At present, out of the 116 stations in which CNG is being sold by MGL in Mumbai city, 44 are operated through HPCL outlets.