GIPCL defers public issue till Q2

<div class="section0"><div class="Normal"><span style="" font-size:="">AHMEDABAD: Gujarat Industries Power Company Ltd (GIPCL) has decided to postponed its public issue to second quarter of 2005-06 as it is planning to change the debt-equity ratio to 75:25 from 70:30 for its Rs 950 crore power project. The company is planning to double the capacity of its lignite-based power plant near Surat from 250 MW to 500 MW by March 2007.</span><br /><br /><span style="" font-size:="">A senior company official told TOI that, in the long run, low-cost debt would make its power price cheaper. He said GIPCL is being offered long-term loans at a competitive rate of 7.5-7.75 per cent per annum. "While the debt component is for a fixed number of years, the equity portion becomes a permanent liability for the company," he added. </span><br /><br /><span style="" font-size:="">The financial closure for this project will be completed soon. Apart from the Rs 950 crore for the 250 MW power project, the company will spend another Rs 150 crore on developing a new lignite mine adjacent to the existing one. "There are few lenders who are willing to fund the entire project. We are still in the process of finalising the lenders from whom we will borrow," said the official. </span><br /><br /><span style="" font-size:="">Gujarat Alkalies & Chemicals Ltd (GACL), another state PSU, has already announced that it plans to invest around Rs 50 crore in GIPCL''s power project. So, out of the Rs 250 crore odd required as eq-uity for the power project, around Rs 200 crore will have to be raised through a second public issue. GACL will be offered an equity stake in GIPCL prior to the public issue. </span><br /><br /><span style="" font-size:="">The state government has a 70 per cent plus stake in GIPCL through a number of state corporations. Gujarat Electricity Board (GEB) has the largest stake of 34.64 per cent, while GACL has 13 per cent stake.</span><br /><br /><span style="" font-size:="">Initially, GIPCL will enter into a memorandum of understanding (MoU) with the new entity of GEB for sale of power. In the next two years the power transmission and distribution is likely to be liberalised considerably and it may be possible for GIPCL to sell power directly to users or to power trading companies and not be fully dependent on GEB, according to the official.</span><br /><br /><span style="" font-size:="">GIPCL currently has a total generation capacity of 555 MW with 145 MW and 160 MW power plants at Vadodara and a 250 MW plant at Surat.</span></div> </div>