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Wednesday, September 20, 2006

GAIL-British Gas spar over MGL public offer

UK-based gas major British Gas India’s plans to seek a waiver from the Foreign Investment Promotion Board, FIPB on a 30% initial public offer, IPO by its gas distribution company, Mahanagar Gas, MGL, has hit a roadblock, reports The Financial Express.

BG’s joint venture partner in MGL, GAIL (India), has said it does not back BG’s stand. “GAIL management is of the view that MGL should plan its IPO by December 2006 in step with the provisions of the JV agreement, as the extension of the FIPB approval is valid only till December 2006,” GAIL wrote to the petroleum ministry on September 6.

In the joint venture, GAIL and British Gas hold 49.75% each; balance 0.5% held by the Maharashtra Government.

BG India managing director William Adamson had recently said that his company had approached the government for a waiver following recent changes in FDI rules.

“Foreign investment in pipelines is no more restricted and has been allowed under the automatic route. As a result, it is no longer required to dilute or disinvest a certain percentage of equity in the company undertaking gas distribution. As we are here to invest and not disinvest, we have sought the waiver,” Adamson had told.

Under the agreed norms, BG and GAIL had to reduce their stake in MGL to 35% each, with MGL floating an IPO. However, BG has been seeking extensions from the FIPB on the IPO clause. The FIPB has given a final extension to BG to launch the MGL IPO by December 2006.

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