GAIL plans to sell VGL stake to Gujarat Gas

  • | Tuesday | 22nd May, 2018

Vadodara: GAIL Gas Ltd, a wholly owned subsidiary of Gail (India) Ltd, is looking to offload its entire stake in Vadodara Gas Ltd (VGL), the only city gas joint venture (JV) company of its kind where a civic body is a partner with a public sector energy company. GAIL had written to the VMC in 2015 too stating that its board had given a nod for offloading its stake to GSPC. GAIL has sought an amendment in the restrictive clauses of its shareholding agreement with the Vadodara Municipal Corporation (VMC) to sell its stake to Gujarat Gas Ltd (GGL), a subsidiary of Gujarat State Petroleum Corporation (GSPC).GAIL and VMC have equal stake (50:50) in the JV company that has operations in the VMC limits presently. It also stated that the stake could not be sold to any entity that was involved in the same business. When the shareholders agreement was signed for the JV in July 2013, the JV was valued at Rs 215crore.

Vadodara: GAIL Gas Ltd, a wholly owned subsidiary of Gail (India) Ltd, is looking to offload its entire stake in Vadodara Gas Ltd (VGL), the only city gas joint venture (JV) company of its kind where a civic body is a partner with a public sector energy company. GAIL has sought an amendment in the restrictive clauses of its shareholding agreement with the Vadodara Municipal Corporation (VMC) to sell its stake to Gujarat Gas Ltd (GGL), a subsidiary of Gujarat State Petroleum Corporation (GSPC).GAIL and VMC have equal stake (50:50) in the JV company that has operations in the VMC limits presently. GAIL had written to the VMC in 2015 too stating that its board had given a nod for offloading its stake to GSPC. In January this year, it again sought that a side letter should be drafted and signed by both GAIL and VMC for amendments that would waive the restrictive clauses.The restrictive clauses in the shareholders agreement for the formation of VGL included that neither of the partners can sell a part of their stake in the JV for five years. It also stated that the stake could not be sold to any entity that was involved in the same business. Also, even after five years, only up to 20% of the stake could be offloaded.“While the lock in period of five years is over, the agreement will have to be amended to enable GAIL to sell its entire stake to GSPC as the latter is involved in the same business,” said a VMC official. GSPC’s subsidiary GGL that has a major presence in city gas distribution will be buying the stake now.VGL commercial director Shailesh Naik said that a proposal for the amendments has been put before the VMC standing committee. The standing committee is expected to take a call on the proposal on Wednesday.The value of the deal is yet to be calculated. When the shareholders agreement was signed for the JV in July 2013, the JV was valued at Rs 215crore. There were 75,000 domestic PNG connections that has now increased to 1,01,800. The number of commercial connection has remained stagnant at around 2,500. VGL operate eight CNG stations in the city too.

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