ADB offers long-term financing to GAIL

Asian Development Bank (ADB), a multilateral development finance institution, has offered financial support to GAIL, a public sector gas major, for executing large-scale projects.

In a report lauding GAIL's performance in implementing the Gas Rehabilitation and Expansion Project (GREP), the bank said the gas firm could consider ADB's participation if it needs long-term finance to fund large programmes.

"GAIL may wish to consider ADB's involvement and participation if the company needs innovative, long-term finance, in either foreign or local currency, to help fund its large, long-term investment programmes, particularly where there are sector policy issues, or, financing constraints from local lenders," the ADB report said.

The ADB offer comes after GAIL's good performance in constructing a pipeline between Bijaipur and Dadri to enhance the capacity of the Hazira-Bijaipur-Jagdishpur (HBJ) pipeline, new or upgraded gas terminals and compressor stations, installation of cathodic protection, and a supervisory control and data acquisition (SCADA) telecommunications monitoring system.

GAIL sources said the company was aware of the ADB offer and would consider all options to finance its projects.

The company, which was rated second among global gas utilities by the Global Platts Survey in 2002 in terms of return on capital invested, is now executing a number of gigantic and capital-intensive projects in India.

The firm is also pursuing number of opportunities abroad and is foraying into upstream sector.

The most ambitious poject of GAIL is National Gas Grid (NGG), which entails an investment of Rs 20,000 crore. Moreover, the company is pursuing Project Blue Sky, which will offer city gas distribution to 22 Indian cities.

The gas major is also pursuing similar opportunities in Asian and north African countries.

In the project performance audit report, ADB praised GAIL India's performance saying the company has emerged as a well-managed, extremely competent, commercially astute and highly profitable company.

GAIL has been one of the biggest wealth creator in India: its market value shot up from Rs 4,808 crore in March 2000 to Rs 19,355 crore as on April 19, 2004, a fourfold growth.

The company's earnings per share (EPS) grew from Rs 10.18 in the financial year 1999-2000 to Rs 19.38 in the fiscal 2002-03.

ADB's current operational strategy for India is to support the gas sector, to reduce pollution and generate other socio-economic benefits. It includes, among others, supporting cross-country pipelines. and clean-fuel projects.