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IndianOil-Adani Gas Pvt Ltd (IOAGPL) will require a capital expenditure of about ₹9,600 crore for developing 10 geographical areas (GAs) for City Gas Distribution (CGD) projects.
IOAGPL is a 50:50 joint venture between IndianOil Corporation Ltd and Adani Gas Pvt Ltd.
In a notice to shareholders seeking their consent for the investment, IndianOil said, “During 2018-19, IOAGPL won 10 more GAs and development of CGD Project in these GAs would require capital expenditure of ₹9,600 crore (approximately) to meet the committed bid numbers. The funding required for capital expenditure has to be met from equity contribution / debt financing.”
IOAGPL has commissioned projects in eight geographical areas. These are Chandigarh, Allahabad, Panipat, Daman, Udhamsingh Nagar, Ernakulam, Dharwad and Bulandshahr. The South Goa GA will be commissioned shortly, IndianOil said.
But, the revenue from the commissioned GAs is currently insufficient to handle the huge financial commitment in the form of capital expenditure to achieve committed targets, the company said. IOCL will need to provide corporate guarantees (in proportion to it’s equity in IOAGPL) to banks on behalf of IOAGPL for obtaining Performance Bank Guarantees in favour of Petroleum & Natural Gas Regulatory Board for City Gas Distribution Projects in various geographical areas.
IOAGPL is currently operating or implementing CGD Projects in 19 GAs.
“IOAGPL would continue to participate in bidding for CGD projects in the future...Considering an estimated average value of ₹25 crore for PBG per GA, IOAGPL may require promoters’ support for issuance of CGs worth ₹200 crore, ” the company said.
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