New Delhi: State-owned oil marketing company (OMC) Indian Oil Corporation Ltd’s (IOCL) plan to acquire as much as 50 percent stake in the Mundra LNG terminal in Gujarat, which was recently inaugurated by Prime Minister Narendra Modi, may have been dropped, people familiar with the development said. In August 2017, IOC had said that it has received an in-principle approval from its board to buy a 50 percent stake in the LNG terminal for around Rs 750 crore. The Mundra LNG terminal, a Rs 5,000-crore project is being built by GSPC LNG Ltd, a unit of Gujarat State Petroleum Corporation Ltd (GSPC).
As of now, GSPC holds 50 percent of the stake in the project and 25 percent is owned by Adani Group. By looking to induct IOC, Adani and GSPC are looking to find a strategic partner.
As of now, GSPC holds 50 percent of the stake in the project and 25 percent is owned by Adani Group. By looking to induct IOC, Adani and GSPC are looking to find a strategic partner. However, the plan now appears to have been discarded. A Gujarat government official familiar with the discussions said that Indian Oil had informed GSPC LNG that it would not go ahead with its plans. However, no official word has been put out by either GSPC or IOC in this regard.
While one of the main reasons cited by Indian Oil is that a concession and sub-concession agreement between the special purpose vehicle, GSPC LNG, and maritime regulator Gujarat Maritime Board is yet to be signed, the expenditure made towards the port and port-led development is another stumbling block for the refiner, the official said. An industry source said that GSPC LNG has invested close to Rs 1,200 crores for dredging and other port-led development activities, which is IOC finds hard to justify to its board because the expenditure was not part of the discussions when Indian Oil expressed interest in investing in the LNG terminal.
It is, however, not clear if Indian Oil would still book LNG import capacity in the terminal.