ADB keen to pick up stake in GAIL's multi-city project

Nov 01, 2004 01:00 AM

GAIL India's Rs 11,000 crore piped gas project has evinced interest from Asian Development Bank (ADB). The bank made a presentation to GAIL expressing its desire to pick up equity in the project which is currently being implemented in 22 cities across India.
GAIL chairman Proshanto Banerjee confirmed that ADB had said that they were interested in picking up equity in the project. But there has been no progress on the issue.

GAIL is awaiting communication on how much equity ADB wants to pick up in its projects. The company has already formed consortiums for different cities which would include public sector oil companies -- Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL), said Mr Banerjee.
The promoters of the project -- GAIL and its joint venture -- partners have decided to put a cap of maximum 50 % stake in each of the consortiums. The balance 50 % will be distributed between a clutch of institutional and retail investors.

The joint venture partner includes the local state government which holds a 5 % stake. GAIL and the other public sector oil company which participates in the project, holds a 22.5 % stake each in the consortium.
The cost of the project for each city is estimated at about Rs 500 crore. The debt-equity ratio of the projects is 2:1. The 22 new cities are spread across Uttar Pradesh, Madhya Pradesh, Bihar, Rajasthan, Gujarat, Andhra Pradesh, Tripura, Karnataka, Maharashtra and Tamil Nadu. Some of the major cities include Ahmedabad, Hyderabad, Rajkot, Allahabad, Gwalior, Indore, Jodhpur, Patna, Chennai, Agartala, Mathura and Bangalore.

GAIL supplies compressed natural gas (CNG) to more than 2.4 lakh households in Delhi, Mumbai and Baroda.
GAIL enjoys a 84 % market share in gas marketing and transmission which includes supplying gas as fuel to power plants and buses in Delhi

Source: Straits Times
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