The Adani family-owned Adani Gas has secured a nod from oil regulator for its demerger from its parent and the subsequent sale of a stake in the company to French energy giant Total SA after it made a formal application for the same, sources said.
The Petroleum and Natural Gas Regulatory Board (PNGRB) had threatened to cancel the 13 city gas distribution licences Adani Gas had won in the 9th bid round 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 discretionary family trusts".
AGL 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 around Rs 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 informations to close the matter".
"Our project work at all GAs (geographical areas) are going on in full swing and with the facilitation and support of PNGRB and all authorities, we are committed to deliver CNG and piped gas to millions of our consumers on a fast track basis.
"We are guided by the principles of corporate governance. It should be noted that we are fully compliant and have transparently represented facts in totality adhering to norms of compliance and disclosure," the Adani Gas spokesperson had added.
The spokesperson also said that there is no question of penalties as the same are not applicable and moreover Adani Gas is in full compliance of applicable rules/laws.
Adani Gas has already set up city gas distribution operations in Ahmedabad and Vadodara in Gujarat, Faridabad in Haryana and Khurja in Uttar Pradesh. It in joint venture with Indian Oil Corp (IOC) is also developing distribution networks in Allahabad, Chandigarh, Ernakulam, Panipat, Daman, Dharwad, and Udhamsingh Nagar.
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