GSPL JV ties-up for Rs 5,000 cr funding

A consortium led by Gujarat State Petronet Ltd (GSPL) has tied-up bank loans of Rs 5,080 crore for its 1635-kilometers (kms) long Mallavaram- Bhopal- Bhilwara- Vijapur gas pipeline project. The project is likely to be commissioned by July, 2014.

GSPL India Transco Ltd (GITL), a joint venture between GSPL and three public sector oil marketing companies, Indian Oil corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) has entered into an agreement with a consortium of 14 banks led by Bank of India for a syndicated loan of Rs 5,080 crore for the project.

The total cost of the project is about Rs 7,255 crore, of which Rs 2175 crore will be raised through equity infusion by the JV partners, while the rest will be GSPL holds 52 per cent stake, IOC has 26 per cent, while BPCL and HPCL hold 11 per cent each in the JV.

"The stipulated time frame for commissioning of the project is 36 months from the start of work. Hence, we expect it to be completed by July 2014. This project will make GSPL a national player in natural gas transmission line business," said Tapan Ray, managing director of Gujarat State Petroleum Corporation Ltd (GSPC), holding company of GSPL.

It may be mentioned that the company had missed the deadline to achieve the financial closure, following which the Petroleum and Natural Gas Regulatory Board (PNGRB) had imposed a penalty on the consortium. Later, the regulator extended the deadline up to July 2, for achieving financial closure.

The pipeline will run through Andhra Pradesh, Rajasthan and Madhya Pradesh. The JV company, GITL had emerged as the lowest bidder for the project in 2010.

Also, in January 2012, GSPL India Gasnet Ltd (GIGL), another joint venture promoted by GSPL had achieved financial closure for a 2351-kms Mehsana -Bhatinda- Jammu- Srinagar pipeline project.

The partners, equity holding pattern, debt-equity ratio and stipulated timeframe for completion for this JV will remain same as the Mallavaram- Bhopal- Bhilwara- Vijapur gas pipeline project.

According to Ray, the two pipeline projects will have a total gas carrying capacity of approximately, 90 million metric standard cubic meters per day (mmscmd).

"With debt syndication of Rs 9,596 crore and equity infusion of Rs 4108 crore, the total investment under these project would be around Rs 13,704 crore," said Ray.

GSPL is currently the second largest gas transmission company in India, with gas pipeline network of over 2000 kms spread across Gujarat.