Ahmedabad, 29 June 2012

Gujarat State Petronet Ltd (GSPL) today moved yet another significant step towards its goal of emerging as a pan-India player in natural gas transmission segment, when its joint venture GSPL India Transco Ltd (GITL) entered into an agreement for syndicated loan of Rs. 5,080 crore with a consortium of 14 banks for its upcoming Mallavaram-Bhopal-Bhilwara-Vijaipur pipeline project (Map attached). Shri Tapan Ray, IAS, MD, Gujarat State Petroleum Corporation (GSPC), who is also Chairman of GITL, signed the agreement with the consortium led by Bank of India. Other banks in the consortium include Punjab National Bank, Canara Bank, Union Bank, Corporation Bank, United Bank of India, Syndicate Bank, Indian Bank, Punjab & Sind Bank, Federal Bank, State Bank of Mysore, Dena Bank, Allahabad Bank and Vijaya Bank.

GITL was selected for implementation of this project by the Petroleum & Natural Gas Regulatory Board (PNGRB) on July 7, 2011, after it emerged as winner in the bidding process. Being the main promoter of the company, GSPL holds 52% stake in GITL and the stake of other partners namely Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) stands at 26%, 11% and 11% respectively. The total cost of the Mallavaram-Bhopal-Bhilwara-Vijaipur pipeline project is about Rs. 7,255 crore, out of which Rs. 2,175 crore will be raised through equity infusion by the JV partners, while the rest 70% fund will be arranged through debt. The stipulated timeframe for completion of the project, having provision for 1,585 km long pipeline, is 36 months.

The achievement of financial closure for the project comes close on the heels of financial tie up of GSPL India Gasnet Ltd ((GIGL), another joint venture promoted by GSPL for implementation of Rs. 6,449 crore Mehsana-Bhatinda-Jammu-Srinagar pipeline project having total length of 2,351 km. The partners, equity holding pattern, debt-equity ratio and stipulated timeframe for completion for this JV are also similar to the former one. Total gas carrying capacity for these projects is approximately 90 mmscmd.

While speaking at the occasion, Shri Ray said, “The achievement of financial closure by GITL marks a major milestone towards implementation of the three cross-country pipeline projects, which would establish GSPL as a pan-India player in the natural gas transmission business. With debt syndication of Rs. 9,596 crore and equity infusion of Rs. 4,108 crore, total investment under these projects amounts to Rs. 13,704 crore. These would be some of the largest infrastructure projects now being taken up in the country, specially when investments are needed to reinvigorate the economy. More importantly, both the syndication rounds witnessed huge lender interest with sanctions exceeding the requirement by over Rs. 1,500 crore each of the time. This undoubtedly reflects the confidence shown by the lenders in the ability of GSPL and other co-promoters.”

It is worthwhile to mention that GSPL is already the second largest natural gas transmission company in India with an operational network of more than 2,000 km long gas pipeline spread across the state of Gujarat (Map attached). GSPL is promoted by GSPC and it has invested an amount of Rs. 4,500 crore so far for the gas pipeline project in Gujarat.

About GSPL

Gujarat State Petronet Limited (GSPL) was set up to complement the efforts of GSPC. While GSPC harnesses and procures natural gas, GSPL is building the infrastructure that transmits the gas across the state of Gujarat and ultimately allows last-mile linkage to the end-user. GSPL is laying a gas grid, to facilitate gas transmission from supply points to demand centres. The gas grid is equipped with the latest bi-directional gas transmission technology to enable two-way gas flow. This introduces a lot of flexibility into transmission by allowing gas to be sourced or uploaded at either end of the pipeline network. Besides, the network is continuously monitored using SCADA systems integrated with GIS technology.

Another innovation is in the open access or contract carrier principle of transmission. This allows any gas transmission company to approach GSPL for permission to use the network on payment of the required charges. Thus, private sector participation in gas transmission is encouraged, which makes more volumes available for consumers. GSPL has already put in place a pipeline network of about 1960 km and further extension of pipeline network is going on. The company has signed gas transmission agreements with various industries for the transportation of natural gas from various supply sources in Gujarat. Presently, the company transmits over 35 MMSCMD of natural gas.