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The proposed merger of three Gujarat government energy companies with Gujarat Gas aims to create synergies and secure a long-term sustainable future for the newly formed entities, according to Milind Torwane, Managing Director of Gujarat Gas. However, this merger will mark the end of Gujarat State Petroleum Corporation (GSPC), a company that has been operational for over four decades.
Torwane highlighted the reasons behind this reorganization, which involves the integration of GSPC (exploration, production, and gas trading), Gujarat State Petronet Ltd (GSPL, gas transmission), GSPL Energy Ltd (GEL, gas trading), and Gujarat Gas (city gas distribution). Speaking to businessline, Torwane explained, "During the last restructuring of GSPC, the three companies were not on equal footing, with GSPC in debt and Gujarat Gas newly acquired. Now, after 7-8 years, all three companies—GSPC, GSPL, and Gujarat Gas—are debt-free, and their profits have stabilized. This equal footing allows for a combination—merger, demerger, or amalgamation—without burdening the other entities."
Torwane emphasized the need for synergy within the group to better address the rapidly changing energy market and growing demand. Following the merger, Gujarat Gas and GSPL Transmission Ltd will remain, with the latter focusing solely on transmission. The employee strength will remain unchanged, with Gujarat Gas employing around 1,200 people and GSPC and GSPL each employing 250.
For the fiscal year 2023-24, GSPC’s turnover was ?18,452 crore, GSPL ?2,031 crore, GEL ?131 crore, and Gujarat Gas ?16,293 crore. Torwane clarified that until regulatory approvals from bodies such as the Securities and Exchange Board are obtained, GSPC, GSPL, and GEL will continue to operate. Once approved, Gujarat Gas will handle exploration, trading, and city gas distribution, while GSPL Transmission Ltd will oversee the transmission business. GSPC will cease operations entirely.
Initially incorporated in 1979 as Gujarat State Petrochemicals Ltd, GSPC was known for its controversial 20 trillion cubic feet (tcf) gas discovery in the Krishna Godavari (KG) Basin in 2005. GSPC later acquired Gujarat Gas from British Gas in 2013. Reflecting on the KG Basin project, Torwane noted that GSPC has since cleaned up its finances and divested loss-making exploration and production units.
After merging with GSPC, Gujarat Gas, previously focused only on city gas distribution, will gain a stronger presence in upstream gas sourcing. This will result in a more streamlined operation with higher revenues and margins, as there will be no need to split profits between Gujarat Gas and GSPC. The merger will also widen Gujarat Gas’s customer base.
While the transmission business is not expected to see significant changes in revenue or volume, GSPL Transmission Ltd will inherit the operations of GSPL India Gasnet Ltd, which owns the 765-km Mehsana-Bhatinda gas pipeline, and GSPL India Transco Ltd, which operates a 1,450-km pipeline from the Krishna Godavari Basin to Bhilwara in Rajasthan. Additionally, GSPCs other investments, including GSPC LNG Ltds 5 million tonnes per annum LNG terminal at Mundra and two gas-based power plants, will be transferred to Gujarat Gas. |
