Oil India Ltd is understood to have dropped its plans to buy a 51 per cent stake in Mukesh Ambani's Reliance Gas Transportation Infrastructure Ltd (RGTIL).
Though OIL had submitted an expression of interest last month, the company felt that it would rather concentrate on its core business at present, sources in know of the development said.
Recently, the company's Director-Finance, Mr T.K. Ananth Kumar, had said that OIL had submitted an expression of interest, but the process was at a preliminary stage.
Eleven companies, including GAIL (India), have bid to buy stake in RGTIL. Mr Mukesh Ambani had appointed bankers JP Morgan, Citigroup and SBI Caps to sell stake in RGTIL.
Though exact details on the valuation of RGTIL are unclear, industry trackers said some of the companies were finding it too high. Reports had put the figure at around $2 billion. According to reports, there were five Indian and six foreign companies that had submitted EoI for buying stake in the company.
RGTIL was incorporated in March 2003 to transport natural gas from Eastern offshore gas fields (D6 block) to consumption centres. Originally a subsidiary of Reliance Industries Ltd, it was transferred to Mr Mukesh Ambani, Chairman of RIL, two years later.
Pipeline networks
RGTIL operates a 1,396-km East-West gas pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat. It transports natural gas from KG-D6 fields.
Recently, RGTIL was in news. The Petroleum and Natural Gas Regulatory Board has asked the Government to cancel the licence granted to the company for going slow on laying four cross-country pipelines.
The pipeline networks were to run from the East coast to the South and also connect East coast with Haldia. Authorisation for the Haldia-Jagdishpur pipeline to be laid by GAIL (India) Ltd may also get affected.
In 2007-08, Relogistics Infrastructure Ltd, a subsidiary RGTIL, was authorised to lay the following pipelines: Kakinada-Haldia, Kakinada-Chennai, Chennai-Bangalore-Mangalore, and Chennai-Tuticorin. The total stretch of the network was over 2,000 km.
Last month at a meeting convened by the Petroleum Ministry, RGTIL was asked to give bank guarantee for the delay.
The company sought three weeks' time from the Ministry to furnish the guarantee. The delay in furnishing the bank guarantee was because Relogistics has since been merged with the parent company.
When a notice was issued to the companies earlier, Relogistics had said that since gas was not available it had not gone ahead with the work on the pipeline.