Unable to acquire an equity stake in Petronet LNG Limited due to a clause in the PLL's articles of association limiting public sector holding to 50 per cent, Hindustan Petroleum Corporation Limited is planning a "backdoor" entry into the liquid gas major.

The HPCL management is considering a proposal to pick up "substantial" equity in PLL by participating in its forthcoming initial public offer where, technically, anyone can bid.

The management is also considering the possibility of seeking petroleum ministry's help in asking PLL to keep a block of equity from its IPO for HPCL.

While Security Exchange Board of India guidelines stipulates that in an IPO, 35 per cent of the offer should be made to general public, anyone can participate in the balance offer. HPCL is eyeing this balance 65 per cent offer.

The Gujarat government, which is also making efforts to pick up 5 per cent stake in PLL, may also adopt the same route.

The article of association of PLL has a special clause, which limits the total equity holding by public sector companies in it to 50 per cent.

Already, 50 per cent of the company's equity is held by four PSU majors. Indian Oil Corporation, Oil and Natural Gas Corporation, Gail and Bharat Petroleum Corporation Limited hold 12.5 per cent of its equity each.

The other equity holders in Petronet LNG are Gaz de France with 10 per cent and Asian Development Bank with 5.2 per cent holding.

The company is in the process of issuing IPO for the remaining 34.8 per cent of the equity. The issue is slated to open on February 19.

The only other way to accommodate HPCL in Petronet LNG as equity partner would have been by getting the existing PSUs to dilute their stake in the company.

Now that Petronet LNG has just started commissioning its operations, those holding the equity in it are reluctant to part with their respective stakes.

While, at the time of Petronet LNG's inception, HPCL, along with the four other oil sector PSUs, was offered a 10 per cent holding in PLL.

However, at that time HPCL had a tie-up with Totalfina for a similar business. Therefore, it turned down the offer and its share of the equity was equally distributed among the other four PSUs.