Adani Gas gets oil regulator nod for demerger, stake sale to Total

The Petroleum and Natural Gas Regulatory Board (PNGRB) had threatened to cancel the 13 city gas distribution licences Adani Gas had won in 2018 for allegedly perpetrating a “fraud” by not disclosing material facts of the demerger.

After PNGRB slapped Adani Gas a showcause notice on Adani Gas Ltd (AGL) on November 29, 2019, the company maintained that “all concerned authorities were intimated about the proceedings pertaining reorganisation of AGL through media/newspapers/disclosures/public listing/bid submissions.”

But, with PNGRB threatening to seek an investigation by the Ministry of Corporate Affairs into the “fraud”, impose a Rs 396.81 crore penalty and cancel licences for all 13 areas that it had won, the company made a formal application for the stake sale. The sources said subsequent to that, PNGRB processed the application and gave its approval.

PNGRB, however, has told the company that it should have sought approval of the stake sale in time. A company spokesperson was not immediately available for comments.

Originally, Adani Gas was part of Adani Enterprises Ltd (AEL) and was demerged into a separate unit before half of Adani family’s 74.8 per cent stake being sold to Total.

PNGRB had in its November notice stated that the AGL at the time of submission of bids in the 9th city gas distribution bid round in July 2018 was “already in the process of undertaking the implementation of a ‘Composite Scheme of Amalgamation and Demerger’“ and was fully aware that this would “result in the change in promoter of AGL from AEL to two discretionaryfamily trusts”.

wAGL submitted bids using the net worth of AEL to meet the bidding criteria and non-disclosure of the change of ownership was a “fraud,” it had contended.

In October 2018, the Adani group agreed to form a 50:50 joint venture with Total for retailing CNG to automobiles and piped cooking gas to households. A year later, Total signed up to buy 37.4 per cent stake in Adani Gas for aroundRs 5,700 crore.

When the news of the PNGRB notice first broke last month, Adani Gas had stated that it has “duly responded to PNGRB with all required data to close the matter.”