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Tuesday, Nov 04, 2003

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Indraprastha Gas in talks with OIDB for debt swap

Our Bureau

Chennai , Nov. 3

INDRAPRASTHA Gas Ltd (IGL) is in talks with its lender, Oil Industry Development Board (OIDB), for prepaying its high-cost loans with cheaper funds borrowed either from the market or from the board itself.

Currently, it is paying nine per cent interest for the Rs 68-odd crore it borrowed from OIDB.

The company, which pipes natural gas into Delhi for automobiles, commercial enterprises and households, expects to prepay the loan with funds that are at least two percentage points cheaper.

IGL expects to invest Rs 183 crore this year - Rs 147 crore in building more CNG filling stations in the Capital, and Rs 36 crore in extending the network of pipes that reach natural gas to kitchens.

All but some Rs 20 crore of the budgeted investments are likely to be funded from moneys generated by the company's operations.

"Our sales gets us Rs 1.2 crore each day," Mr A.K. De, Managing Director, told newspersons.

The company does not expect to go to the market for more loans, so interest costs may not climb up much this year. But an interest-lowering debt-swap is needed now since the company's shares are likely to be bought by the public.

For the first time since the company was set up in 1998, the public will have an opportunity to own IGL shares, as the three institutional investors who co-promoted the company are selling a part of their holdings.

IGL, a joint venture of GAIL (India) Ltd, Bharat Petroleum and the Government of Delhi, who hold 50 per cent of the company's Rs 140-crore equity.

The other half of the equity is held by IL&FS, IDFC and UTI. The first two own 20 per cent each; UTI has 10 per cent.

These institutional investors now want to sell half of their respective holdings. And that is how four crore shares of IGL are being offered to the public, through the book building route.

Speaking of the earnings potential the company has, Mr De said that a large number of automobiles in the National Capital Territory (Delhi) is yet to convert to CNG, which is 42 per cent cheaper than petrol, 18 per cent than diesel and only half as costly as LPG.

Besides, only about 10,000 households today get gas through pipelines.

IGL has plans to expand its operations to areas such as Gurgaon, Noida, Greater Noida and Faridabad.

Mr De said that since no other company could come in and set up a competing infrastructure for piping gas, IGL was a virtual monopoly.

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