BPCL Eyes Indian Govt's Stake in Gail

Indian government-owned fuel retailer Bharat Petroleum Corporation (BPCL) is eyeing the government’s majority stake in India’s largest gas marketing firm Gail, according to a report in Mint.

The talks are at an early stage and the Indian government has not formally approved the plan, the newspaper said September 18. The government stake is estimated to be valued at rupees 180-200bn ($2.8-3.1bn).  

“BPCL is interested in a merger with Gail to expand its range of businesses and the government has been informed about it. Any merger should happen at the fair market price but there may be some premium to the prevailing value of the stock because these companies are Maharatnas,” a finance ministry official told Mint.  Maharatna is a term given to high value state owned companies.

With demand for natural gas steadily rising, BPCL is aggressively looking to expand in the sector.

Gail owns and operates the largest gas pipeline network in India and has ambitious projects under construction that are expected to come online in next few years. It is working on the ambitious $2bn Jagadishpur-Haldia-Bokaro-Dhamra Natural Gas Pipeline (JHBDPL). The 2,539-km pipeline is expected to be fully completed by December 2020. The first phase of the pipeline with be complete by end-2018 and the second phase by end-2019. This pipeline will connect the eastern states of Uttar Pradesh, Bihar, Jharkhand, West Bengal and Odisha. The government of India will partially fund the gas pipeline project. The project will also see city gas distribution networks set up by Gail India in seven important towns and cities in eastern India, namely, Varanasi, Patna, Ranchi, Jamshedpur, Kolkata (Calcutta), Bhubaneshwar and Cuttack.

Shardul Sharma