Rs3,500 crore FDI loss looms as BG seeks to exit Gujarat Gas

Formerly known as British Gas, BG Group Plc, the UK’s third-largest natural-gas producer is examining the possible sale of its 65% stake in Gujarat Gas Company Ltd.

On Tuesday, the India’s biggest private gas distributor, Gujarat Gas announced on stock exchanges that it has been informed by its majority stakeholder (read BG) has started a process which may lead to divesting its shareholding in the company.

Speculations are rife that energy companies like Adani Group, Essar, Reliance or even Gujarat government may buy out BP’s stake.

The market capital of Gujarat Gas was Rs5,367 crore on Tuesday. BG Group holds 65.12% stake in Gujarat Gas and as per share price of the company, based on Tuesday’s closing, promoter group’s stake is valued around Rs3,500 crore. So, if promoter indeed exits from the company, Gujarat will lose FDI worth of Rs3,500 crore, in a single sale.

After 14 years, company is considering exit from Gujarat Gas. Gujarat Gas had confirmed that it had received intimation from its majority shareholder, BG Group that they have started the initial process of evaluating the potential sale of their shareholding in Gujarat Gas. “The final decision in this regard will be subject to further assessment,” said a statement from the company.

The managing director of Gujarat Gas Company Ltd, Shaleen Sharma said that this announcement will have no effect on the day-to-day business of the company. “I am confident that no matter what the outcome of this process is, Gujarat Gas will continue to deliver the value,” he said.

“BG is considering the disposal as part of a global portfolio review,” said Mark Todd, a spokesperson of BG Group Plc.

“We’ve not taken any decisions,” Todd said from England where BG is based. “There is no guarantee of any transaction.” BG, which is focusing on projects in Brazil, Australia, the US and North Sea, has been spinning off some non-core assets. Last year, it sold its interest in Premier Power Ltd. to AES Corp. and a 50% stake in Seabank Power Ltd. to Cheung Kong Infrastructure Holdings Ltd.

(With inputs from agencies)