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“We are aware of the opportunity and looking at it very closely,” two directors on OIL board told Financial Chronicle. OIL chairman N M Borah was not available for comments. The decision, as and when it happens, would pave the way for OIL to diversify and foray into LNG business.
The valuation of the stake will be the most important deciding factor, indicated one of the directors. “The stock has shown a upward trend from Rs 80-120 in the last two months. We have discussed the issue in the company board recently and will also consult merchant and investment bankers before taking a decision,” he added.
A senior IGL official said, "Sourcing of gas is a very important component for IGL's growth. Taking this into consideration, the company will look forward to buy equity in Petronet. However, the issue is yet to be discussed at the board of directors' level." "Once the board arrives at a in-principle decision, further steps can be decided," he added.
However, even if OIL and IGL decide to buy ADB’s stake in PLL, they would require amendments in the articles of association of the company. According to the articles of association of PLL, the stake of government-run companies in PLL cannot exceed 50 per cent. PLL is a joint venture company promoted by four government-run oil companies, GDF Suez and ADB.
At present ONGC, IOC, GAIL and BPCL hold 12.5 per cent each amounting to 50 per cent stake in the joint venture company. French gas major GFD Suez holds 10 per cent in PLL. The public, financial institutions, investors and mutual funds in PLL hold the remaining 34.8 per cent.
“At least 75 per cent of shareholders with voting rights will have to approve a amendment in the articles of association that will allow any of the present state-run companies to increase their stake or a new PSU to become a stake holder in the company,” said a senior oil industry official who didn’t wish to be named.
Earlier in 2008, when ADB first expressed its desire to divest its stake, GAIL under U D Choubey as CMD proposed to buy 5.2 per cent stake of ADB. GAIL also then said that the rule that the public sector shareholding should not exceed 50 per cent of the equity, it was also mentioned that this would be subject to any decisions of the government to the contrary and provisions of the Act.”
GAIL then further argued that “PLL should become a government undertaking since it was necessary because of the strategic reasons required on control of oil and gas sector where government rules the majority to provide the much needed energy security for supply of gas to core sectors namely power, fertiliser, transport and domestic sectors.” Present GAIL chairman, B C Tripathi couldn’t be contacted for his comments whether the company is still interested to increase its stake in PLL.
Choubey, who is now the Director general of SCOPE, the apex public sector enterprises body, said, “The argument that PLL should become a government undertaking is quite valid even now.”
In the current prevailing stock price of PLL, ADB’s stake is valued close to Rs 430-450 crore. The company’s scrip closed at Rs 113.25, down 0.57 per cent compared with the previous trading session on the Bombay Stock Exchange on Wednesday. It has touched a 52-week high of Rs 119.55 on August 23.
Talking on the valuation of the stock, Lalit Khanna, head of research at Globe Capital, indicated that the stock price is ahead of time. “This (PLL scrip) has a good potential considering the sector. It is unfolding for future growth,” Khanna added.
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