Confusion over GSPC IPO this year

Even as Chief Minister Mr Narendra Modi on Thursday announced that Gujarat State Petroleum Corporation Ltd (GSPC) has struck fresh natural gas, with a total potential of more than 20 trillion cubic feet (TCF) reserves in the Deendayal Block in Krishna-Godavari Basin, some confusion prevailed over whether the blue-chip State-owned company would go ahead with its planned IPO later this year.

When asked about the IPO during his video press conference at New Delhi and Gandhinagar from the offshore field, Mr Modi stated that GSPC is “financially sound”. “We don’t need more funds. International financial institutions are ready to give us funds. But we are capable of funding our plans. Our existing financial modus operandi would continue. And the profits from our first well of Deendayal Block will be dedicated to the education and health for the poor children of Gujarat.”

Market conditions

On the other hand, in New Delhi, Gujarat Minister of State for Energy and Petrochemicals Mr Saurabh Patel sounded positive about the IPO. He said, “Merchant bankers are looking at a proposal. However, no decision has been taken and it will depend on market conditions and our internal accruals. At present the company has no plans.”

The company has appointed five merchant bankers — two international and three domestic. The report is expected in two months, he added.

GSPC plans to invest about Rs 4,000 crore in the next three to four years in its prolific K G Basin block. The company has made five discoveries in its KG-OSN-2001/3 block with the most recent one being at KG-22. The first of the five discoveries was made in June 2005 in the KG-8 well.

“We are going to spend around Rs 4,000 crore in our discovery in KG-8 over next three to four years”, Mr Patel said. The company expects to receive approvals for the development plan for the KG-8 well in the block soon from the regulator, the Directorate-General of Hydrocarbons.

Mr Modi, while announcing the find in KG-22 in the same block said, “KG-22 alone holds three trillion cubic feet (TCF) of gas,” reports The Hindu Business Line.