GAIL split plan scrapped, company to monetize pipelines | Now the company will raise money from the sale of pipeline through InvIT, waiting for approval from the Ministry of Petroleum

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New Delhi5 minutes ago

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GAIL accounts for nearly three-fourth of the country’s total gas pipeline network of 17,126 km. – Symbolic photo

  • GAIL sends proposal to set up InvIT to Petroleum Ministry
  • The new plan will start with the stake sale of two pipelines

State-owned gas company GAIL (GAIL) India Limited has scrapped the proposal for bifurcation. Instead, the company will now raise money by selling the pipeline through InvIT. GAIL Chairman and Managing Director Manoj Jain gave this information on Wednesday. Jain said that a proposal to raise money by selling two pipelines and formation of Infrastructure Investment Trust (InvIT) has been sent to the Ministry of Petroleum and Natural Gas. He said that the InvIT is likely to be formed in the current financial year as soon as the approval of the ministry is received.

GAIL is the country’s largest natural gas trading firm

GAIL is the largest natural gas marketing and trading firm in the country. GAIL accounts for nearly three-fourth of the country’s total gas pipeline network of 17,126 km. This makes GAIL strong in the market. Last year, a proposal was made to demerge GAIL’s pipeline business into a new entity. Jain said that now there is no pending proposal in this regard. In response to a question, Jain said that we will now raise money through InvIT. The proposal to form InvIT for stake sale of two pipelines has been sent to the ministry. After getting this approval, we will start working on the fund raising plan.

The entire pipeline business will not be sold together

Replying to another question, Jain said that we will not sell the entire pipeline business at once. Instead, the money will be raised by selling stakes in the pipeline one by one. He said that GAIL will raise money by selling a major part of some of its pipelines through InvIT. As per the plan, the pipelines will be transferred to InvIT. Thereafter the units can be sold to the investors. Apart from this, trading can also be done on the stock exchange. This way GAIL will be able to raise money like a sale and use it as capital expenditure.

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First sale of these two pipelines

To begin with, GAIL is planning to sell the Dahej-Uran-Panvel-Dabhol and Dabhol-Bangalore pipelines. InvIT is a type of mutual fund that allows potential individual and institutional investors to invest even small amounts. Investments are made in infrastructure through InvITs, which earn investors in the form of returns on a small part of their income. He said GAIL will retain its major stake in the Dahej to Dabhol and Dabhol to Bangalore pipelines. Initially 10-20% stake can be sold through InvIT.

InvIT may be formed in the current financial year

Jain said that after getting approval from the ministry, the proposal would be sent to the cabinet. InvIT can be formed in the current financial year if the cabinet gets permission in time. Industry sources say that GAIL has a large pipeline network. For this reason, the company has scrapped the proposal to split GAIL. According to sources, a subsidiary cannot raise funds at the cheaper rate at which GAIL can get funds. The government holds 54.89% stake in GAIL India.

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