RGTIL credit rating unaffected by loan refinancing

The credit rating of Mukesh Ambani-owned RGTIL remains unaffected following the company refinancing its rupee loan, domestic agency Crisil has said.

The unlisted firm, which owns and operates a 1,386-km gas pipeline from Andhra coast to Gujarat, has restructured the loan after it incurred huge losses as volumes of natural gas it transports fell due to dip in output of eastern offshore KG-D6 fields.

"Crisil's ratings on the existing instruments of RGTIL remain unaffected following the refinancing of its rupee term loans," the agency said in a Rating bulletin.

Reliance Gas Transportation Infrastructure Ltd's credit ratings had a total debt of Rs 16,010 crore.

RBI through its August 2014 notification on 'refinancing of existing long term project loans' has allowed banks to refinance existing project term loans, and fix a longer repayment period taking into account the project life-cycle and cash-flows, subject to certain conditions.

"RGTIL, being eligible under this facility, has received sanctions from banks for refinancing of its existing rupee term loans, which are now repayable over a period of 16 years (as against repayment scheduled over the next four years), thereby better aligning RGTIL's project cash-flows to its annual debt obligations," Crisil said.

The company gets is business from Reliance Industries Ltd, in which is 45.24 per cent is owned by Ambani. It reported a net loss of Rs 436 crore in 2014-15.

Crisil said RGTIL's cash-flows are sensitive to the volume of gas available for transportation. Low volumes result in lower capacity utilisation and hence in lower cash accruals. The ramp-up in gas transportation by RGTIL depends on the extent to which RIL and other gas producers can raise production.

Incorporated in 1999, RGTIL has built, and operates the 1386-kilometre cross-country pipeline to evacuate natural gas produced by RIL's KG-D6 block and gas production from other discoveries, in the KG basin, off the eastern coast of Andhra Pradesh.

The pipeline extends from Kakinada (Andhra Pradesh) to Bharuch (Gujarat), and has a capacity to transport up to 85 million metric standard cubic meter per day (mmscmd) of natural gas at design entry point pressure of minimum 72 bar guage pressure.

As against, KG-D6 is currently producing around 12 mmscmd.

The ramp-up in transportation would depend on the extent of increase in production by RIL and gas production by other discoverers, Crisil said.