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GAIL may not concede right of first refusal

GAIL may not concede right of first refusal

GAIL India, which is one of the promoter shareholder of Petronet, may refuse to concede its right of first refusal on the 5.2 percent stake of Asian Development Bank (ADB) in Petronet.

The multilateral lending agency plans to sell its 5.2 per cent stake in Petronet, which has been formed as a joint venture by the Government with non-public sector character.

Besides GAIL, ONGC, Indian Oil Corporation and Bharat Petroleum Corporation are the promoter shareholders holding 12.5 per cent stake each.

The other stakeholder is GDF SUEZ, the largest importer of LNG in Europe, which is the strategic partner, holding 10 per cent equity. The balance is held by the public, financial institutional investors, and mutual funds.

Earlier, the promoter stakeholders were looking at acquiring ADB stake. But the Ministry of Petroleum and Natural Gas had refused permission. The ministry was keen that the character of Petronet did not undergo a change.

If the public sector promoter stakeholders are allowed to acquire ADBÂ’s stake, it would make Petronet a public sector entity, as the combined stake of the promoters will be over 50 per cent.

It is learnt that the independent directors in the GAIL board rejected the proposal to forego the first right of refusal to acquire ADB stake in PLL. The board had felt that if a private stakeholder was brought in then there was always a fear of it acquiring a larger stake from the open market and threatening the position of the promoters.

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