Petronet LNG plans to raise Rs 1,700 cr for Dahej project

Jyoti Mukul & Anupama Airy

New Delhi, May 7: PETRONET LNG Ltd (PLL) is planning to raise long-term rupee and foreign currency loans to the tune of Rs 1,700 crore on a limited recourse project finance basis for its Rs 2300-crore Dahej LNG terminal in Gujarat. A senior PLL official told The Financial Express that the company is looking for a loan with a minimum tenor of 10-12 years. For this, PLL will approach international export credit agencies.

Majority of this loan will be used to refinance the Rs 1,400-crore short- term bridge loan for the Dahej terminal, the official said, adding, the whole exercise of seeking long-term loan is likely to begin in few months and they hope to secure the loan before the end of the current financial year.

“PLL has to pay back its short-term bridge loan of Rs 1,400 crore by June 30, 2002. Since the Dahej terminal is scheduled for commissioning by December 2003, and returns are expected to come only later, PLL will be going in for refinancing the short-term loan,” he said.

Officials said PLL will also simultaneously initiate proceedings for raising long-term debts. The company is in the process of drafting certain documents in this regard and the same will be finalised by June-end.

However, prior to seeking long-term loans, PLL will have to put a seal on various contracts and agreements, officials said. At present, PLL is engaged in working out a final information memorandum (FIM) containing details of the project and the agreements reached to execute it.

The FIM will also incorporate details of Rasgas’s (the supplier of LNG to PLL) liquification plant in Qatar. Train 3 of the plant, which will be supplying gas to the Dahej terminal, will be built at the cost of $1.6 billion (Rs 7,500 crore).

According to sources, details of Rasgas’ offshore and onshore contracts are awaited for inclusion in FIM. The memorandum, which is expected to be ready by July, will be sent to prospective long-term lenders who will then conduct due-diligence.

While PLL has awarded the EPC contract for the Dahej project to Iishikawajima-Harima Heavy Industries Company (IHI) of the Japan-led consortium, the shipping contract has gone to Mitusi OSK Lines-led consortium.

The company has also signed sales purchase agreement with Rasgas of Qatar, while for marketing of re-gasified LNG, heads of agreements (HoA) have also been signed with Gas Authority of India (Gail), Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Ltd (BPCL). Officials said PLL will soon sign the pipeline transportation agreement (PTA) with Gail, IOC and BPCL.

Out of the Rs 1,400-crore short-term bridge loan, Rs 250 crore has been sanctioned by Infrastructure Development Finance Company (IDFC) and the remaining has been tied up with various banks, including the State Bank of India, State Bank of Patiala, Jammu & Kashmir Bank, Oriental Bank of Commerce, Allahabad Bank, State Bank of Hyderabad and Indian Overseas Bank.