News: GAIL to invest Rs 25,000 cr in next 5 years

(PTI 09/05/2007) New Delhi - State-run GAIL (India) Ltd plans to invest about Rs 25,000 crore in laying new pipelines and expanding petrochemical business during the next five years, a part of which may be raised through sale of its stake in 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," GAIL director (finance) R K Goel told a news conference here.

The company holds 2.4 per cent stake in Oil and Natural Gas Corp, 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 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," he said.

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 toward the end of the current fiscal to meet part of that requirement," he said.

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

Company chairman U D Choubey said GAIL recorded a 11 per cent jump in turnover in 2006-07 to Rs 16,407 crore. Net profit was Rs 2,387 crore against Rs 2,310 crore a year ago.