Oct 31, 2021

CCI Approves GAIL’s Acquisition of 100% Shareholding in OTPC

On September 9, 2021, CCI approved the acquisition of approximately 26% of equity share capital of ONGC Tripura Power Corporation Limited (‘OTPC’) by GAIL India Limited (‘GAIL’) from IL&FS Energy Company Limited (‘IEDCL’) and IL&FS Financial Services Private Limited (‘IFIN’). The proposed acquisition was carried out pursuant to GAIL being selected as the successful bidder in an expression of interest issued by Infrastructure Leasing and Financial Services Limited.[1]

GAIL is a Central Public Sector Undertaking and operates as a producer of natural gas with diversified interest across the natural gas value chain of trading, transmission, LPG production and transmission, LPG re-gasification and petrochemicals. GAIL is also engaged in power-generation activities through renewable sources of wind and solar energy. OTPC is engaged in the business of generation and supply of electricity through its natural gas-powered plant at Tripura, which supplies power in north east India. OTPC also holds a 26% equity stake in North East Transmission Company Limited (‘NETCL’), which is engaged in the transmission of electricity.

In its competition assessment, CCI assessed the horizontal overlaps between the business activities of GAIL and OTPC in the broader market for generation of power in India, where the combined market shares of GAIL and OTPC were less than 5%.  CCI noted that there was no horizontal overlap at the narrower level, as GAIL is engaged in power generation through renewable sources of energy (i.e., solar and wind), whereas OTPC is engaged in generation of power through non-renewable energy, i.e., natural gas. CCI also identified the following two potential vertical relationships between GAIL and OTPC: (a) supply of natural gas by GAIL (upstream level), and power generation by OTPC (downstream level) (‘GAIL OTPC Vertical Relationship’); and (b) power generation by GAIL (upstream level) and transmission of power by NETCL (downstream level) (‘GAIL NETCL Vertical Relationship’). While assessing the GAIL OTPC Vertical Relationship, CCI noted that OTPC already had an existing long-term supply agreement with ONGC regarding natural gas supply and accordingly would not procure natural gas from GAIL. Further, while assessing the GAIL NETCL Vertical Relationship, CCI noted that NETCL has transmission lines between Tripura and Assam which were specifically set up for the evacuation of power from OTPC’s Tripura plant, whereas GAIL has power plants in Rajasthan, Karnataka and Tamil Nadu. Further, the power generated by GAIL is not transmitted to the north east region, where OTPC operates.

Therefore, given the insignificant combined market shares in the market for power generation in India and since the potential vertical relationships would not cause any foreclosure, CCI decided to approve the proposed transaction.


[1] Combination Registration No. C-2021/08/862.




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