* After buyback, Sri Lanka to float 49 pct of gas company
* Move is one more case where govt has reversed privatization (Adds quotes, background)
COLOMBO, Oct 7 (Reuters) - Sri Lanka has approved a majority stake buyback in Royal Dutch Shell's local arm Shell Gas Lanka for $63 million, a top government official said on Thursday.
"The cabinet approved the government to buy 51 percent of Shell Gas at $63 million and the government will have the controlling power," Cabinet Spokesman Keheliya Rambukwella told reporters.
The government now holds the remaining 49 percent of Shell Gas Lanka.
"The 49 percent will be offered to the public and listed in Colombo," Rambukwella said, adding the pricing of the initial public offering and other process for listing are being worked out by a committee appointed by the government.
The $42 billion economy's government has followed a zero privatisation policy since 2005 due to anti-privatisation trade union actions by Marxists and left political parties.
The government sold a majority stake in its Colombo Gas Company to Shell in 1996 for $37 million.
"We had so many issues with the company. The Trade Ministry had no control in pricing and had to go to court several times on price changes. So in that backdrop, this is a good move," Rambukwella said.
Hiran Seneviratne, a spokesman for Shell Gas Lanka, said the purchasing agreement had not been signed yet.
Sri Lanka's government has reversed some deals it privatised earlier to have full control of the business. It bought a 43.6 percent stake held by Dubai's Emirates airline in national carrier SriLankan Airlines for around $55 million early this year. (Reporting by Shihar Aneez; Editing by Bryson Hull and Muralikumar Anantharaman)