Petronet LNG taps IFC, ADB-KfW for $300 mn

Petronet LNG (PLL) is in advanced stages of negotiations with top multilateral institutions like the International Finance Corporation (IFC) - an arm of the World Bank - and the Asian Development Bank (ADB)-KfW combine, for raising $300 million (Rs 1,300 crore) in debt to fund its $800-million (Rs 3,600 crore) expansion plan.

PLL has lined up significant expansion plans, including setting up of an LNG terminal at Kochi and expanding its terminal at Dahej. While most of the investment at Dahej will be met through internal accruals, the company would require nearly $800 million in debt finance for Kochi.

?We need to raise about $425 million. We are in talks with IFC to raise $150 million on a long-term basis. Another $150 million is likely to be sourced from ADB and KfW. Both of these are rupee-denominated loans. For the remaining $125 million, we will approach our consortium of 16 bankers,? Mr P Dasgupta, CEO, Petronet LNG told ET. The proposal will be placed before the company?s board at its meeting on April 16.

?We are also exploring other options like raising the amount through foreign currency loans in the international market,? Mr Dasgupta added. The step is in line with the company?s objective to move towards a blended interest rate regime. While loans from multilateral institutions would carry a fixed rate, the remaining would be a flexible rate.

PLL has decided to invest Rs 1,600 crore on expansion at Dahej, most of which will be met though internal accruals. This would involve construction of an additional re-gassification line with its associated LNG storage tanks and if required a second jetty, to expand the capacity of the existing terminal from 5 million metric tonnes per annum (mmtpa) to 10 mmtpa.

Additionally, PLL has firmed up plans to invest another Rs 2,600 crore to construct a greenfield 2.5 mmtpa LNG terminal, with provision for raising its capacity to 5 mmtpa, within the Cochin Port area, at Kochi, in Kerala.

At a 70:30 debt equity ratio, the Kochi project would require debt fund of Rs 1,600 crore. Out of this, long term loans from these multilateral institutions would contribute nearly Rs 1,300 crore.

Source: The Economic Times, April 10, 2007
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