BG plc, through its wholly-owned subsidiary British Gas Asia Pacific Holdings Pte Ltd., has today agreed to acquire 44.31 per cent of Gujarat Gas Company Ltd., from Mafatlal Industries Ltd., and the Hindustan Oil Exploration Company for a total consideration of some £25.7 million.

The takeover regulations in India require that BG(APH) also conduct a public tender for up to an additional 20 per cent of the equity shares of Gujarat Gas Company. The total consideration for the public offer is up to £11.6 million, giving a total acquisition cost of up to £37.3 million.

Gujarat Gas is India's largest gas distribution company, supplying customers in Gujarat State, western India. Its turnover in 1995/96 was some £19 million, with a net income of £4.2 million.

BG plc Executive Director Stephen Brandon, who is responsible for the company's International Downstream operations, said: "BG has acquired a young dynamic company with major growth potential. This growth will be realised through the application of skills and technology developed in our operations in the UK and internationally.

"In addition, the investment in Gujarat Gas creates a major strategic opportunity for BG plc to link related energy projects in the region and to exploit synergies with our existing investments."

Since 1994, BG has been a 50 per cent partner with the Gas Authority of India in Mahanagar Gas, which is developing a gas distribution system in Mumbai (Bombay). Currently it supplies more than 3,000 domestic customers, and 10 per cent of the city's taxi fleet. It is shortly to begin connecting industrial customers.

BG is also developing projects to build a gas-fired power station at Pipavav in Gujarat State, and for the importation of liquefied natural gas into Gujarat.

In addition to India, the International Downstream operation of BG plc has significant investment in the United States, Germany, Argentina, Thailand, Malaysia, the UK and the Interconnector pipeline, which will link the gas networks of the UK and continental Europe from next year.

Major projects are also being developed in the UK, Italy, Trinidad, the Philippines and Brazil.

Notes to editors

Gujarat Gas Company

The Gujarat Gas Company was founded in 1988 by Mafatlal Industries Ltd and the Gujarat State Industrial Investment Corporation. Gujarat Gas began distributing gas on a small scale in Ankleshwar and Bharuch districts and later developed a separate distribution system in Surat following commissioning of a second supply pipeline.

Gujarat Gas has 1,000 kms of gas pipeline serving around 300 industrial, 800 commercial, 74,000 residential and 600 CNG customers in Surat, Ankleshwar and Bharuch.

In 1995/96, turnover was £19m approx with a net income of £4.2 approx. Sales growth has averaged 30 per cent over each of the last three years.

Gujarat Gas currently employs approx 700 people with an average age in the late-twenties. The existing professionalmanagement has a progressive attitude, and has made quality and customer service a primary objective - winning IS09000 certification for two of its operations and progressing certification in other areas. The existing management has made training a priority.

Other projects in Gujarat

BG plc is seeking to develop a liquefied natural gas import terminal in the State of Gujarat. The terminal will have an initial capacity of 2.5 million tonnes of LNG per year with the capability of extension to five million tonnes of LNG per year. Gujarat Gas would be a potential customer for this gas.

Imported gas could come from Qatar, where BG already has interests in liquids production and potential gas export developments.

BG has been pre-qualified by the Gujarat Power Corporation as a bidder for the proposed 615MW power plant to be built at Pipavav. BG's plan is to fuel the plant with gas from the LNG import terminal.

In addition, BG has expressed interest to the Gujarat Industrial Investment Corporation in being involved in the expansion of the State's gas transmission pipeline network and in undertaking exploration and development work in Gujarat State, to identify new indigenous gas supplies.

International operations

When BG plc was demerged in February 1997, the company undertook that its international operations would be self-financing. This investment is in line with that policy. The acquisition cost has been taken into account in the strategic review of BG plc's international assets recently completed.