GSPC plans to part-sell stake in subsidiary

AHMEDABAD: Even as state-owned Gujarat State Petroleum Corporation (GSPC) plans to hit the capital market next year, the company is looking at the possibility of equity sale in its wholly-owned subsidiary, GSPC Gas Company.

The company, which is in the business of city gas distribution, has already initiated talks with a few oil and gas players and also financial institutions to explore opportunities to pick up stake in the company.

Already, oil PSU Indian Oil Corporation and financial institution Infrastructure Development Finance Corporation (IDFC) have shown interest in picking up stake in the company and talks are on with both of them.

“There is an agreement that equity participation is needed either from a financial institution or an oil and gas player. However, the board has not yet decided on the level of equity participation in GSPC Gas,” sources in GSPC told ET.
The subsidiary is already supplying city gas to retail consumers in Gandhinagar and has an extensive plan to set up city gas grid network in six other cities in Valsad, Vapi, Rajkot, Morbi, Nadiad and Navsari.

Most of these cities are already on the state’s gas grid network with Rajkot and Morbi to be added by the end of the calendar year.

“There is a huge industrial market which is ready to source gas and we hope to tap this market. This will help in volume sales and will offset low margins from domestic gas supplies in cities such as Gandhinagar,” company sources said.

The parent company GSPC is preparing to hit the capital market to part-fund its exploration and development plan in the Krishna-Godavari basin. Last year, the company claimed to have discovered gas of 20 trillion cubic feet which the company wants to commercialise by 2009.