BG may get divestment waiver for Mahanagar

NEW DELHI: British Gas (BG) India may get a waiver from divesting 20% shareholding in Mahanagar Gas (MGL) through an initial public offering (IPO), much against the wishes of its partner Gail India. As per the entry condition, both the JV partners are committed to bring in 20% public shareholding in MGL by December 31, ’06.

A senior official in the petroleum ministry said the government would ‘overrule’ Gail’s decision for an IPO and pave way for BG India to get a waiver. Foreign Investment Promotion Board (FIPB) had already refused to entertain BG India’s application for the waiver in want of Gail’s concurrence.

The U-turn in the ministry’s stand seems to be guided by the fact that a hostile attitude towards foreign investors would discourage FDI inflow. On August 1, ’06, the petroleum ministry had written to Gail to take ‘necessary action’ for divesting promoters’ share in MGL through an IPO.”

The letter had reminded Gail that FIPB would not give another extension for divesting promoters’ stake. “FIPB in the meeting held on December 23, ’05, while granting extension for one more year, has categorically stated that no further extension will be permitted, therefore, the company is required to bring out an IPO to meet the entry condition in the FIPB approval,”

it said. Finance ministry maintains that BG India’s application for waiver requirement would not be considered, unless both the JV partners agree on the issue and a resolution is passed by the board of the company.