Gujarat-based Adani Gas, an arm of Adani Enterprise, will pick up 20 per cent equity in Green Gas Limited, a joint venture between Gail and the Indian Oil Corporation (IOC).
Green Gas supplies city gas and compressed natural gas in Agra and Lucknow in Uttar Pradesh. Gailand IOC hold 22.5 per cent each in the company, while Uttar Pradesh State Industrial Development Corporation holds five per cent. Aditya Vikram Birla Group and financial institutions IDFC and UTI together hold 50 per cent stake in Green Gas.
“We have signed a memorandum of understanding with Green Gas to pick up 20 per cent equity in the company. We will merge our assets with Green Gas. Since both of us were in the same city, we decided to work together so that there is no hassle. Also, now, wherever we go we will go together,” said Rajeev Sharma, chief executive officer, Adani Gas.
SBI Capital Markets has been given the mandate to evaluate assets of Green Gas and Adani Gas. The company has begun work on drawing a financial model and a business plan for Green Gas. The board has also asked it to try and arrange private equity infusion upto a specified limit.
IOC and Gail decided that Adani Gas may be inducted as a strategic partner in Green Gas on account of their gas pipeline infrastructure in Lucknow. The combined infrastructure of both companies is expected to provide ready infrastructure to service most parts of the city.
“Adani Gas has infrastructure in Lucknow so we decided to utilise their network. If the business case of Adani Gas is found beneficial to the interest of Green Gas and its shareholders, Adani Gas could be offered up to 20 per cent equity in Green Gas,” said a Green Gas executive.
Adani had spent around Rs 65 crore to lay steel and plastic pipelines for around 60 kilometre in Lucknow. The company, however, had to suspend work midway as it failed to source gas and was subsequently forced to stop work after an intervention by the Petroleum and Natural Gas Regulatory Board in 2009.
Green Gas has syndicated a term loan of Rs 153.6 crore to finance the ongoing city gas distribution expansions and capital expenditures.
