PSU Consortium Not To Revise Bid For BG Group's Stake In Gujarat Gas

MUMBAI: The PSU consortium comprising Bharat Petroleum Corporation (BPCL), Oil and Natural Gas Corporation ( ONGC) and Gujarat State Petroleum Corporation (GSPC) is not keen to raise its bid of $800-900 million for UK-based energy major BG’s 65% stake in the Gujarat Gas Company.
“We now know for a fact that our consortium was the only one to submit a final bid for BG’s stake in Gujarat Gas and BG has got back to us saying that our bid was too low an offer to accept, but as of now we are not looking to revise our bid,” said a senior official from one of the PSU’s participating in the consortium.”
He added: “Our bid is considerably lower than BG’s current market cap and we might consider revising it if we do have to compete with another serious competitor but not as of now given that we are the sole bidders.” Gujarat Gas’s share were up 4.43% last week and closed on Thursday at Rs 403 up Rs 8 since Monday, its current market cap is Rs 5,152 crore.
Earlier ET had reported that BG Group was scouting for new investors as it was not very satisfied by the response it has got from the final bidding process where key players like Torrent Power, Adani and global energy companies that were supposed to bid aggressively refrained from bidding.
BG had earlier extended the bid deadline to March 15 from the earlier February 29 cut-off to give more time to companies to discuss the matter with their boards and decide on the bidding process. Now, it is unlikely that the deal will close soon and could stretch to April-end.
The government’s move to regulate market margins charged by city gas distributors and Gujarat Gas’ marketing exclusivity period of five years coming to end in 2014, are two key facts that have influenced interested bidders to stay away.
Industry watchers also say that private equity players such as Actis, Standard Chartered, Apollo Global Management and Goldman Sachs were also in the fray but are not keen anymore, although sources say that BG could still be in active negotiations with these companies.
Last November, BG had decided to exit Gujarat Gas and had mandated Citigroup to advise them in the disinvestment. Gujarat Gas is India’s largest private sector natural gas distribution company in terms of sales volume.