Gandhinagar: The Gujarat government has announced the merger of three state energy companies with Gujarat Gas, a move aimed at creating synergy and ensuring a sustainable future for the combined entities. Milind Torwane, managing director of Gujarat Gas, stated that once the merger is complete, the Gujarat State Petroleum Corporation (GSPC), a four-decade-old entity, will cease to exist.
The merger involves GSPC (which handles exploration, production, and gas trading), Gujarat State Petronet Ltd (GSPL, the gas transmission arm), GSPL Energy Ltd (GEL, a gas trading firm), and Gujarat Gas, the city gas distribution company. Torwane highlighted that the merger would not overburden any of the companies involved, as all three firms have become debt-free over the past few years. Their average annual profit after tax (PAT) has consistently ranged between ₹1,000-1,200 crore over the last 2-3 years.
Torwane further explained that the reorganisation is essential to addressing the challenges posed by the rapidly evolving energy sector. "Synergising within the group will allow us to better tap into opportunities and cater to the growing demand for energy," he said. The merger will not result in any job losses, with the 1,200 employees at Gujarat Gas and 250 each at GSPC and GSPL maintaining their positions.
As the merger process moves forward, GSPC’s role will be phased out. In the financial year 2023-24, GSPC recorded a turnover of ₹18,452 crore, GSPL ₹2,031 crore, GEL ₹131 crore, and Gujarat Gas ₹16,293 crore. Until regulatory approvals from bodies like the Securities and Exchange Board of India (SEBI) are obtained, all three companies will continue their operations. After approval, only two companies will remain: Gujarat Gas, which will handle exploration, trading, and city gas distribution, and GSPL Transmission Ltd, managing the gas transmission business. GSPC, originally established in 1979 as Gujarat State Petrochemicals Ltd, will cease to exist.
GSPC, known for its controversial 20 trillion cubic feet gas discovery in the Krishna Godavari (KG) Basin in 2005, sold its 80% stake in the KG Basin to ONGC in 2016-17 for ₹8,100 crore. The company has since moved to clean up its financial books, focusing on profitable units.
Following the merger, Gujarat Gas, previously focused on city gas distribution (CGD), will enter the upstream business, acquiring natural gas sourcing capabilities. This will widen its customer base and increase both revenues and margins. Previously, margins were split between Gujarat Gas and GSPC, but the merger will enable Gujarat Gas to source gas and supply it directly to end-users.
The transmission arm, which will emerge from this reorganisation, will see little change in terms of volume or revenue. However, assets like the 765-km Mehsana-Bhatinda natural gas pipeline and the 1,450-km pipeline from the Krishna Godavari basin to Bhilwara, Rajasthan, will transfer to GSPL Transmission Ltd.
Other entities where GSPC holds investments, such as GSPC LNG Ltd, with its 5 million tonnes per annum LNG terminal at Mundra, gas-based power plants, and renewable energy projects, will also pass on to Gujarat Gas. /BI
