NEW DELHI, Dec 29: The Union cabinet on Monday approved Royal Dutch Shell Group's proposal to establish a wholly owned Indian subsidiary for setting up a liquefied natural gas (LNG) terminal, a government spokesman said."A new company will be formed under the Indian Companies Act, 1956 which will build and own the LNG import terminal. Initially, this company would be owned 100 per cent by Shell," a statement issued by the spokesman said.
Shell's proposal to establish a wholly-owned subsidiary foran LNG import and regasification terminal at Hazira in the western state of Gujarat was approved by the Foreign Investment Promotion Board on November 29, 1997, it said. However, since the investment exceeded Rs 6,000 crore, the proposal required the approval of the Cabinet Committee on Foreign Investment, a sub-panel of the cabinet. The terminal, with annual handling capacity of 2.7 million tonne of LNG, will supply natural gas to Hazira units of Essar Power Ltd and Essar Steel Ltd it said. Essar and Shell will
consider entering into a joint venture with Essar acquiring equity in the company within three years of its incorporation, the statement said. "Shell and Essar have already entered into a joint development agreement for implementing the project," it added. The expenditure on the LNG terminal is estimated at $540 million with an equity component of $162 million, the statement said. The cabinet also cleared Reliance Industries' proposal for setting up two LNG terminals.
The Reliance proposal aims at raising foreign equity of about $290 million through global depository receipts (GDRS), American Depository Receipts (ADRs) and private placement to part finance two LNG receipt terminals of 5 million metric tonnes per annum (MMTPA) each at Gujarat. While one terminal would be set up at Jamnagar the other LNG terminal will be installed at Hazira. Reliance proposes to raise foreign equity of Rs 1,150 crore for the project. The CCFI also accorded approval to BPL Celluar Holdings Ltd for raising ADRs of $ 200 million
with a green shoe option of 15 per cent for investing in a telecom project. The green shoe option would enable the company to raise a further 15 per cent equity, if required.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
