The firm said the expansion would worsen the penetration of Pipelined Natural Gas (PNG) and Compressed Natural Gas (CNG) infrastructure, creating an ecosystem for a gas-based economy.

Business

Adani Total Gas secures $375m financing for city gas distribution expansion

Published on September 21, 2024

Adani Total gas said the expansion would worsen the penetration of Pipelined Natural Gas (PNG) and Compressed Natural Gas (CNG) infrastructure, creating an ecosystem for a gas-based economy.

Adani Total Gas Ltd (ATGL) has successfully secured $375 million in financing from a consortium of global lenders to accelerate its City Gas Distribution (CGD) expansion, the company announced on September 20.

This marks the company’s first international financing deal, consisting of an initial commitment of $315 million with an accordion feature that allows for an increase in the loan commitments.

Key Lenders and Purpose of Financing

The financing was arranged through five international banks: BNP Paribas, DBS Bank, Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation.

The funding will support ATGL’s capital expenditure program aimed at expanding its CGD network across 34 authorized Geographical Areas (GAs) in 13 states. The expansion is set to cover up to 14% of India’s population, potentially benefiting over 200 million people.

Focus on Piped and Compressed Natural Gas Infrastructure

ATGL’s growth strategy includes enhancing the penetration of Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) infrastructure, which aligns with the Indian government’s goal of increasing the share of natural gas in the country’s energy mix from 6% to 15% by 2030.

The expanded CGD network will help develop a gas-based economy by providing more efficient and cleaner energy solutions.

Global Lenders Reinforce Confidence in CGD Sector

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ATGL’s Chief Financial Officer, Parag Parikh, emphasized the significance of the financing, noting that it reflects the confidence global lenders have in the CGD sector’s role as a transitional fuel source.

He added that this financial framework would foster ATGL’s sustained growth and pave the way for future funding opportunities, ensuring long-term value creation for stakeholders.

Advisors for the Transaction

For this financing, Latham & Watkins LLP and Saraf & Partners served as legal advisors to ATGL, while Linklaters and Cyril Amarchand Mangaldas provided counsel for the lenders.

ATGL currently holds authorization in 34 GAs, while an additional 19 GAs are managed by Indian Oil-Adani Gas Private Limited (IOAGPL), a joint venture between Adani Total Gas and Indian Oil Corporation Limited.