GAIL to buy 15% in Egypt's National Gas

GAIL India Ltd. Monday said it has signed an agreement with Egypt Kuwait Holding Co. to acquire a 15 per cent stake in National Gas Co of Egypt.

Under the agreement, GAIL will acquire the Natgas stake for $19 million, the company said in a release. Natgas is the largest private local distribution company for natural gas in Egypt with participating interests by Egypt Kuwait Holding, Shell Gas BV, Petrogas and Jaicorp.

"Egypt is a focus country for GAIL and we hope that this partnership shall also help grow other business areas in Egypt and its neighbouring countries," GAIL Chairman Proshanto Banerjee said.

Banerjee said GAIL has made an investment of $22 million in Egypt, which is its largest investment abroad. GAIL is also looking at other African and West Asian countries and is keen to associate with Egypt Kuwait Holding and other players in cross-country gas pipeline projects in nations like Jordan and Lebanon, the release said.

Monday, GAIL India shares ended at Rs 178.80 on the National Stock Exchange, down 0.50 per cent over Friday.

Our Bureau, Kolkata adds: Earlier, Gail's investment plan in Haldia Petrochemical Ltd (HPL) went awry after the West Bengal government, a promoter in HPL, said the company did not require more than Rs 150 crore from the gas major.

Nirupam Sen, state industry minister, said, "As things stand now, we need about Rs 150 crore from a PSU. We have been discussing this issue with GAIL. If it cannot bring in the money, we will look for other sources."

The corporate debt restructuring (CDR) package called for Rs 600 crore fresh equity of which The Chatterjee Group (TCG), another HPL promoter, has arranged Rs 143 crore. The rest Rs 457 crore was to be brought in by Gail and also through an initial public offer.

The PSU major wanted to invest Rs 332 crore but could not get the Public Investment Board (PIB) clearance. The lower commitment sought from Gail could be to facilitate the IPO.

With Gail intending to put Rs 332 crore, Rs 125 crore left for the IPO would violate the minimum offering norm of the market watchdog Securities & Exchange Board of India (Sebi).

Proshanto Banerjee, chairman and managing director (CMD) of Gail, however, said company would receive the government nod soon. "The government clearance is not an issue. Gail can bring in as much as HPL needs. It will depend how much the company requires. We value the long term association with HPL," Banerjee said adding that final numbers would have to be reworked once the company go for an IPO later this year.

If HPL promoters stick to Rs 150 crore tag, Gail has to go back to its board for fresh approval. The company has made it clear it did not want to be a portfolio investor in HPL. It is seeking a bigger say in the company by way of board berth and key functional position.

The Rs 332 crore investment would have given Gail about 16 per cent stake in the extended equity of Rs 2,000 crore. However, HPL now may ask for a premium given the company posted a profit after tax (PAT) of Rs 116 crore in 2003-04 and hopes to post Rs 250 crore PAT this fiscal.