Need 7.5-10 million metric tonne of LNG: Petronet LNG
On the back of talks of a stake sale from Petronet LNG to Qatar Company, CEO & MD of Petronet LNG, P Dasgupta says that the stake sale is indeed very likely. He says that the purpose of this stake sale is for the expansion of the rigs.-->
As a result of all the planned expansion, he says that the company will need additionally close to 7.5 - 10 million metric tonne LNG.
Excerpts from CNBC - TV18’s exclusive interview with P Dasgupta:
Q: How much stake is likely and what is the purpose of this stake sale to Qatar Company?
A: As you know we have already got an approval for USD 100 million fully convertible bond. This when converted would represent equity stake of anywhere between 7.5% - 12.5%, depending on the price at which these bond are going to be converted.
The due diligence process has started off and we will have to negotiate the price at which the bonds will convert. So I can't tell you a fixed percentage today. It will all depend on the price, which is agreed upon for the bonds to convert.
The purpose of this stake is for the expansion of the rigs. We are creating a new terminal in Kochi, and there is also the possibility of an LNG plant in Ratnagiri.
All put together, we will need additionally close to 10 million metric tonne or maybe 7.5 million metric tonne of LNG.
Today when we met the Finance Minister, we made a request for additional LNG of close to 7.5 million metric tonne. We are today Qatar’s single largest buyer in the world. So let's hope that we will get another 7.5 million metric tonne.
Q: Can you give us a ballpark as to at what price you want to convert these bonds, and will you be looking at selling some more stake as well?
A: Generally fully convertible bonds, the kind which several Indian companies have done in the last two years, the conversion premium is generally between 25-45%, depending on the current market price.
So at the lower end, if my current market price when we strike the deal is going to be Rs 60, then at 25% it would mean that the conversion price could be Rs 75. If it is 40%, then it could be Rs 85.
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Q: Do you want to seal this relationship with Qatar even further going forward by giving them a greater stake and maybe a role in the management of the company?
A: Nobody has a role in the management of the company other than inviting a Director on the Board. For the day-to-day management of the company we have three whole time Directors including me.
We have a board of 15 and the balance 12 are either representatives of the promoting companies which are four, and the rest are all independent Directors.
If it's a board-managed company, then yes, to that extent we would be coming in into the management of the company through the board through the board participation.
Q: Is there anything else that will come to the table aside from the additional 10 million metric tonne like you pointed out?
A: We are trying to get in 10 million metric tonne, but as you know, Qatar has already committed to the entire expansion which we are doing upto 77 milion metric tonne.
So we will have to wait and see how much more they can commit.