Government companies will not be allowed to take part in the Petronet LNG's initial public offer, which opens on March 1, 2004.

The company has reserved a minimum 10 per cent of the shares for qualified institutional bidders and up to 50 per cent for non-institutional and retail investors.

Petronet is issuing 260,979,900 shares of Rs 10 each at a price band of Rs 13-15 through book building. The offer will constitute nearly 35 per cent of the fully diluted post-issue paid-up capital of the company.

The post-issue paid-up capital of the company will stand at Rs 750 crore (Rs 7.5 billion), of which the four main promoters, Oil and Natural Gas Corporation, Indian Oil Corporation, Gas Authority of India and Bharat Petroleum Corporation will hold 50 per cent, Gas de France 10 per cent and Asian Development Bank will hold 5.2 per cent.

The IPO proceeds will be utilised to expand the capacity of the LNG terminal at Dahej in Gujarat to 10 million tonne per annum.

Suresh Mathur, managing director and CEO, of PLL said, "The expansion will be done at 30 per cent of the cost. In fact, the original project cost of Rs 3,200 crore (Rs 32 billion) was lowered by innovative project cost to Rs 2,510 crore (Rs 25.1 billion)".

PP Dasgupta, director (finance), PLL said, "The expansion cost will be anywhere between Rs 700 crore (Rs 7 billion) and Rs 800 crore (Rs 8 billion). We have sold out all our LNG and the product from second ship has already been tied-up".

Dasgupta said the company has fixed a price with RasGas at $20 per barrel for five years and, thereafter, to a floor and cap price.

RasGas has also agreed to comeback on negotiating table to review price of LNG to match any competition.

Besides in the event that there is significant supply of LNG from competitors at lower price, RasGas has decided to match the price.

Petronet is seeking Kerala government's clearance for its proposed Rs 1,600 crore (Rs 16 billion) LNG terminal at Kochi for supplying natural gas in south India.