KOCHI, 1 September 2007 — International Finance Corporation (IFC), the World Bank’s private lending arm, and Asian development Bank will extend loans to Petronet LNG projects.
The IFC will extend a loan of $150 million to Petronet LNG Ltd for construction of a new liquefied natural gas import and re-gasification terminal here while ADB and KfW, the German Development Bank, have signed financing agreements to provide Petronet with an Indian rupee denominated loan of Rs6.75 billion ($169 million).
The deal with the IFC also includes an additional $150 million from commercial lenders. “This will help the company significantly reduce harmful environmental emissions, while making energy cheaper for private and commercial users by displacing more expensive imported fuels,” the IFC said in a statement.
Petronet LNG, a publicly listed company, has a major import and re-gasification facility in Dahej, Gujarat. The company plans to expand its operations to Kochi, expected to be operational by 2009.
“In only three years, the company has emerged as the main player in India’s natural gas sector,” Rashad Kaldany, IFC Director for Infrastructure, said. “We are providing flexible, growth-oriented corporate financing that will support the company’s expansion, enabling it to provide environmentally clean fuel.”
“In addition to providing us with much-needed funding, IFC’s support also opens new financing options at competitive rates for our future projects,” Prasad Dasgupta, Managing Director and CEO of Petronet LNG, said. Petronet’s production accounts for about 25 percent of the country’s total gas consumption. The increasing demand has led to the company’s decision to double its import capacity at Dahej and build a new facility. India, the world’s fifth largest consumer of primary energy, is struggling to supply additional energy to fuel its economic growth. The country’s heavy dependence on coal and oil for 85 percent of the energy is a concern from the environment as well as energy security perspective.
While India has significant natural gas reserves, its domestic supply is not likely to keep pace with demand and the country needs to import significant amounts of gas either as LNG or via a pipeline.
Petronet LNG is a joint-venture of four Indian energy majors, Gas Authority of India Limited, Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited and Oil and Natural Gas Corporation Limited. Gaz de France, the world’s fourth largest buyer of natural gas, joined the force as another major shareholder to provide technical support.
“I’m proud to have witnessed Petronet being conceptualized, established, and operated as a successful PPP (public-private-partnership) undertaking as recommended by ADB,” S. Chander, Deputy Director General of ADB’s Private Sector Operations, said.
