GAIL to raise $225 million through external commercial borrowings

GAIL India, the state-owned gas transporter and distributor, plans to borrow $225 million (around Rs1,000 crore) through the external commercial borrowings (ECB) route to fund expansion plans.

It will raise the amount through foreign currency syndicated loan and export credit agency guaranteed loan early next fiscal.

ECB will help the company to bring the cost of borrowings down as there is a difference of over 100 basis points in costs between the domestic and the foreign markets.

“We expect to raise funds at the rate of around 7.30% per annum including full hedging and withholding tax,” said a company official.

The company has raised rupee bonds at the coupon rate of 8.80% in the current fiscal. It has borrowed Rs734 crore till date in the current fiscal. 

The company, which has gas transmission network of around 7,847 km of high pressure trunk pipelines with a capacity to carry 157 million metric standard cubic metres per day (mmscmd) of natural gas across the country, plans to double its network over the next 4-5 years.

GAIL has lined up expansion worth Rs35,000 crore including in the underserved markets such as south India.