GAIL will borrow Rs. 70,000-mn from domestic, overseas markets

New Delhi: GAIL (India) Ltd plans to borrow up to Rs 7,000 crore in the next four years from the domestic and overseas market to partially fund its capital expenditure requirements for its pipeline projects. Besides borrowing from the market, the company has the option to dilute stake in ONGC and China Gas Holdings Ltd.

Mr R.K. Goel, Director (Finance) GAIL, said that expanding the pipeline infrastructure to 12,000 km will cost about Rs 20,000 crore by 2011-12. “Of the total borrowings of Rs 6,000-7,000 crore, around 30 per cent will be through foreign loans and remaining through the domestic market,” he told Business Line.

He, however, said that if the Government relaxes the external commercial borrowings (ECB) norms for public sector undertakings, the company may consider raising 40 per cent through this route.

The proposed pipelines are Dadri-Bawana-Nangal pipeline, Chainsa-Gurgaon-Jhajjar-Hissar, Jagdishpur-Haldia, Dabhol-Bangalore, and Kochi-Kanjirkkod-Bangalore/Mangalore pipeline. He also said the company had already roped in Moody’s rating agency for an international rating to help in overseas borrowings. The rating is expected shortly, he added.

Surplus funds


Mr Goel said that the company already had about Rs 3,000 crore surplus funds to start these projects. “The company would require borrowing money from October-December quarter of the next fiscal (2008-09).”

The Director Finance said GAIL may also consider diluting a part of its stake in ONGC and China Gas Holdings Ltd if it fails to arrange sufficient funds to meet its capital expenditure. “We may dilute our holding in China Gas from the current 6.6 per cent to a limit which would enable us to retain directorship on its board, but it will be one of the last options. Partial stake sale in ONGC is also being considered,” he said.

GAIL currently holds 2.4 per cent stake in ONGC. GAIL’s original investment in ONGC was Rs 556 crore which at today’s current rate stood at about Rs 4,500 crore.

Joint venture


Taking about projects, he said, GAIL may soon set up an equal joint venture with China Gas Holdings for taking up city gas distribution projects in China and India. “The new company will be based in Bermuda and the proposal is likely to be taken up at the next board meet of GAIL,” he added.