Gail to spend Rs 25,000cr for expansion by 2012

Gail (India) plans to invest about Rs 25,000 crore in laying new pipelines and expanding its petrochemical business during the next five years, a part of which may be raised through sale of its stake in Oil and Natural Gas Corporation (ONGC).

"Out of the total capex, Rs 10,000 crore will be funded from internal resources and the remaining Rs 15,000 crore will be borrowed from domestic and overseas market," R K Goel, director (finance), Gail said.

The company holds 2.4% stake in ONGC, which is worth Rs 4,672 crore at today's share price of Rs 909.

"We may look at selling part of our holding in ONGC to meet the capex requirements," Goel said.

Gail's current debt-equity ratio of 0.12:1 will help it leverage debt for the expansion projects. "We are getting ourself rated. Moody's Hong Kong is rating us and once that comes, foreign debt will be easier."

The company will invest Rs 2,744 crore during current fiscal - Rs 1,761 crore in laying new gas pipelines, Rs 146 crore in petrochemicals, Rs 500 crore in oil and gas exploration and Rs 268 crore in new projects.

"Next year, the capex will be around Rs 6,000 crore and we may borrow Rs 2,500 crore towards the end of the current fiscal to meet part of that requirement."

The state-run gas transporter may raise as much as 60% of the planned borrowings overseas while the remaining would be domestic debt.