 "Domestic gas producers face 18% price reduction")
Gujarat Gas, country's largest city gas distribution entity, could soon get bigger. Plans are afoot for it to merge with another local entity, Sabarmati Gas (SGL). The Union government-controlled Bharat Petroleum Corporation (BPC) is likely to hold stake in the merged entity.
SGL is a joint venture with BPC, set up in 2006, for the development of gas distribution in Gandhinagar, Sabarkantha and Mehsana districts of north Gujarat.
Gujarat State Petroleum Corporation (GSPC), with subsidiary Gujarat State Petronet (GSPL), holds 25% equity interest in SGL. BPC holds another 25% and institutional investors collectively hold 49.8% equity interest.
"The process is on to bring all strategic investors in agreement for the merger. Price discovery steps have also been taken. A meeting of all the investors might take place shortly," said an official from the Gujarat government. Details of price discovery could not be ascertained.
Gujarat Gas is serving a little over a million residential customers, dispensing compressed natural gas through 234 outlets and providing cleaner energy solutions to 2,750 industrial units in Gujarat, with a pipeline network of 15,000 km.
"The company is committed to reach out to every possible natural gas user in its expanded geographical area, which now comprises close to 19 districts," Gujarat Gas said in its annual report.
The net profit after tax for 2014-15 was Rs 443.6 crore from Rs 28.4 crore in 2013-14. The company had healthy net cash flows from operations of Rs 1,180 crore during the year.
"Merger between SGL and Gujarat Gas will help Gujarat Gas tap the north Gujarat and Mehsana regionsn which are strong industrial beltsn with potential to grow the natural gas business," an official said.
GSPC had in October 2012, acquired 65.12% in Gujarat Gas Company for Rs 2,464 crore from British Gas (BG) group. BG's shareholding was acquired by Gujarat Distribution Networks, in which the GSPC Group holds 100% stake.
GSPC Group is one of the largest gas trading companies of the country. It has a significant presence in the transmission and distribution businesses. According to SGL's 2014-15 annual report, it had recorded an increase of 256% in profit after tax at Rs 110.8 crore during 2014-15 against Rs 31.15 crore during 2013-14.
In its industrial segment, the company recorded an increase of 10% and in its domestic household connections, of 10.6%. Household connections went from 78,107 in FY14 to 86,427 in FY15.
For SGL, 62% of business is generated through industrial and commercial segments, 32% from CNG outlets that serve the automotive segment and around six% accrues through the piped natural gas network catering to homes in north Gujarat.
