Gujarat Gas may buy stake in Adani Energy

Gujarat Gas Company Ltd (GGCL), a subsidiary of British Gas (BG), is scouting for a strategic alliance in the form of an acquisition or a stake in privately run gas distribution entities.

Sources said the company could link up with Gujarat Adani Energy Ltd (GAEL), which, too, is looking at a strategic partner for its gas distribution business.

The move would come at a time when public sector majors such as GAIL India Ltd, Hindustan Petroleum Corporation Ltd and Indian Oil Corporation are finalised their plan to make foray into gas distribution in Gujarat.

However, an official spokesperson for Gujarat Gas, which is into the distribution of piped natural gas (PNG) and compressed natural gas (CNG) in a few cities in Gujarat denied any such development 'as of now.'

"We do not comment on any market speculation," he said.

A source close to Gujarat Gas said, an evaluation process has been initiated for a possible opportunity with a few entities. "Guarat Adani Energy may be one of those companies as it is laying its distribution network in Ahmedabad and Vadodara, two cities with high potential for the gas distribution business," the source said.

The chief executive officer (CEO) of the Adani Group, Sanjay Gupta told Business Standard on Monday that Gujarat Adani Energy was open to investments but it has not yet received a proposal from Gujarat Gas.

"We are open for any such opportunity but as of today, there is no such proposal from Gujarat Gas. If any proposal comes to us, we would certainly evaluate it."

Gujarat Gas caters to 1,45,000 households besides over 1,800 commercial customers and 475 industrial customers.

A source in the state government confirmed the move and said, "As Gujarat Adani Energy was issued licences for distribution of both CNG and PNG by the state energy and petrochemicals department, it has the responsibility to inform the state government in case of dilution of stake in any other company. This initial information is with the department. The state government has no issues with any such development but the companies concerned would have to ensure that they meet the deadlines set by the state government about setting up the gas distribution network in the areas concerned."

Gujarat Adani Energy, which has recently opened its first CNG station in the Maninagar area of Ahmedabad, has spent over Rs 130 crore in infrastructure building for the gas business, while the company was expected to invest Rs 300 crore for the same during next two years.

"If the merger takes place or even if Gujarat Gas picks up a significant chunk of Gujarat Adani Energy, an initial public offer (IPO) would be on the cards," said a source.