Total acquires 37.4% in Adani Gas for Rs5,662cr
14 Oct 2019
Total, the world's second-largest LNG player, is expanding in India with the acquisition of a 37.4 per cent stake in Adani Gas for Rs5,662 crore ($600 million). As part of the deal Total will also own 50 per cent interest in several assets belonging to the Adani Group across the gas value chain.
More specifically, Total will have 37.4 per cent stake in Adani Gas Limited, one of the four main distributors of city gas in India of which Adani holds 74.8 per cent and also 50 per cent stake each in two import and regasification LNG terminals - at Dhamra in east India and potentially Mundra in the west.
To reach a 37.4 per cent shareholding in Adani Gas Limited in accordance with Indian stock market regulations and subject to regulatory approvals, Total said it would initially launch a tender offer to public shareholders to acquire up to 25.2 per cent of equity shares before buying the remaining shares from Adani.
Currently, Adani Gas operates in five geographical areas on its own with another 14 GA’s under implementation. It operates in another 8 GA’s through a joint venture with Indian Oil Corporation with 11 more under execution.
The company runs a pipeline network of over 6,500 km, more than 84 CNG stations with a customer base over 403,000 spread over Ahmedabad, Vadodara, Faridabad and Khurja.
Adani Gas sold 1.5 million metric standard cubic metres per day (mmscmd) of CNG and PNG in FY19, clocking revenue of Rs1,823.49 crores and net profit of Rs228.71 crore.
The infrastructure conglomerate is also constructing a 5 million tonne capacity LNG import terminal at its Dhamra port in Odisha. The group is also building a 3.2 million tonne LPG terminal at Mundra port and a 1.2 million tonne LPG terminal at Dhamra.
The government has created entry barriers by granting 8-years marketing exclusivity and 25 years network exclusivity to CGD firms with no regulation around marketing margin and product pricing.
For Total, the Indian natural gas market represents a substantial growth perspective. It is currently only 7 per cent of the energy consumption but has grown over the last three years by more than five per cent per annum, supported by an active policy of the Indian government that aims to diversify its energy mix and develop domestic use of gas in cities and as fuel for vehicles. India has set the ambitious target of increasing the share of natural gas in its energy mix to 15 per cent by 2030.
Adani Gas Limited aims to expand its distribution of gas in the next 10 years through its 38 concessions covering 7.5 per cent of the Indian population and market natural gas to industrial, commercial and domestic customers, targeting 6 million homes as well as through 1,500 retail outlets of natural gas for vehicles.
As part of this partnership, Total will bring its LNG and retail expertise and will supply LNG to Adani Gas Limited. Total and Adani will also establish a joint venture to market LNG in India and Bangladesh.
“Energy needs in India are immense and the Indian energy mix is key to the climate change challenge. Firmly investing to develop the use of natural gas in India is in line with Total’s ambition to become the responsible energy major. The natural gas market in India will have a strong growth and is an attractive outlet for the world's second-largest LNG player that Total has become. Adani will bring its knowledge of the local market and its expertise in the infrastructure and energy sectors. This partnership with Adani is cornerstone to our development strategy in this country,” said Patrick Pouyanné, chairman and CEO of Total.
The government expects investments over $60 billion in building gas pipeline and terminal infrastructure to support demand and growth, petroleum minister Dharmendra Pradhan said on Sunday.
Adani Gas is India’s biggest private city gas distribution company with exclusive authorisation to develop infrastructure, operate and market gas in 38 geographical areas (GA) and supply piped natural Gas (PNG) to residences, commercial and industrial units as well as compressed natural gas (CNG) to automobiles, catering to about 7.5 per cent of India’s population covering 71 districts in 15 states.
Currently, Adani Gas operates in five geographical areas on its own with another 14 GA’s under implementation. It operates in another 8 GAs through a joint venture with Indian Oil Corporation and 11 more under execution.
The company runs a pipeline network of over 6,500 kms, more than 84 CNG stations with a customer base over 403,000 spread over Ahmedabad, Vadodara, Faridabad and Khurja.
Adani Gas sold 1.5 million metric standard cubic metres per day (mmscmd) of CNG and PNG in FY19, clocking revenue of Rs1,823.49 crores and net profit of Rs228.71 crore.