Gaz de France freezes investment in India

French national gas company Gaz de France, which holds a 10 per cent stake in Petronet LNG, has decided against investing further in India.

It had earlier said it would invest up to $20 million in various facilities in the country, but has now decided to target Europe and the US.

"The company's strategy is not to make fresh investment abroad but to strengthen its position in Europe and the US," a senior executive at Gaz de France's international division (India) project office told Business Standard.

"We are also upset that the Petronet board has asked us to pay a premium on the 10 per cent stake we are picking up in the company. Why should we pay a premium on the shares when we are a strategic partner in the project?"

The Petronet board has decided that Gaz de France and the other promoters, including Asian Development Bank (ADB), will have to pay a premium on the shares offered in the initial public offering (IPO) of the company. The price band for the issue has been set at Rs 13-15 per equity share of Rs 10 face value each.

The proceeds of the public offer will be used for doubling capacity at Petronet's liquefied natural gas (LNG) import and regassification terminal at Dahej in Gujarat to 10 million tonnes per year.

"There will be no capital increase or equity dilution during the expansion of the project," said a senior executive at Petronet. The paid-up capital of the company will stand at Rs 750 crore after the issue.

"Even ADB, for the first time, will be paying a premium for picking up equity in a greenfield project. It will pay a premium on 1.95 million shares amounting to a 5.2 per cent equity stake in Petronet," the executive added.

Gaz de France International is a strategic partner in Petronet's 5 million tonnes per year Dahej terminal. It has entered into a technical services agreement with Petronet, which involves training the latter's staff and advising on the operation of the Dahej terminal for a year.

The company has been operating and maintaining LNG terminals in France for four decades.