BG eyes stake in Paguthan power plant

The UK-based BG group is eyeing a stake in the Hong Kong-based CLP Power Asia's power plant at Paguthan in Gujarat. The BG group was earlier known as British Gas.

Sources close to the development said: "The BG group is planning to pick up a minority stake in the Gujarat Paguthan Power Station which is expected to expand capacity to 1,000 Mw. The group will subscribe to fresh equity to be issued by the company."

When contacted, Nicole McMohan, director, policy and corporate affairs, BG India, said: "We do not comment on merger and acquisition issues."

The BG group sees major growth in India. In its first annual report last year, Nigel Shaw, CEO of BG India, had said the group "intends to double the current investment level of $500 million over the coming years".

Dave Roberts, the BG group's executive vice-president for the Middle-East and Asia, has said in the British Parliament, "India is critical to the BG group's success. For us, India is a strategic hub for the Asia and the Middle-East region."

Sources claimed that the group was pumping in more funds "to be in the entire energy value chain"

"The group is eyeing the equity in lieu of gas supplied for the power station. The power station is in the process of stepping up its capacity from 655 Mw to 1,000 Mw. Besides, the company is also looking at setting up two smaller power plants, each having a capacity of not more than 100 Mw. These small plants are being set up for supply of electricity to industrial hubs in the state," the sources said.

The BG group is expected to source gas from the Panna, Mukta and Tapti gas fields, off the west coast of India.

Recently, the BG group and its consortium partners -- ONGC and Reliance Industries "" hiked gas prices to $4.08 per million metric British thermal unit (MMBtu) against the earlier price of $3.11 per MMBtu.

At the higher price, the consortium partners have already entered into contracts to sell the entire production of 11 million cubic metres of gas per day (mmscmd) for a period of one year.

Of the 11 mmscmd of gas, 6 mmscmd will go to the state-owned GAIL (India) at $ 3.86 per MMBtu and the remaining gas is to be picked up by Reliance Industries and Indian Petrochemicals Corporation Ltd and the BG group's subsidiary Gujarat Gas Company Ltd (GGCL).

Industry sources claimed that the BG group would source gas from the Panna-Mukta-Tapti region for the Paguthan plant through its transmission and distribution company GGCL.

The Hong-Kong based CLP Power Asia acquired a majority stake in GPEC in February 2002 through an 80:20 joint venture with PowerGen UK Plc. After PowerGen pulled out of the country, GPEC is now 100 per cent owned by CLP Power Asia.