Highest safety rating for GAIL bonds

New Delhi: ICRA has assigned a `LAAA' rating, indicating the highest safety, to the Rs 1,000-crore non-convertible bonds programme of GAIL (India) Ltd. The LAAA rating earlier assigned to the company's Rs 500-crore bonds programme has also been reaffirmed.

The highest safety ratings, according to an ICRA statement, take into account GAIL's strong market position in the gas transmission and distribution business, its strong financial position arising out of its healthy profitability resulting in strong cash generation from operations and low gearing.

 ICRA, however, has noted the uncertainties in the regulatory framework governing the gas pipeline industry and GAIL's operating environment. The Union Government has issued a draft pipeline policy that provides for appointment of a regulator for pipeline tariffs and establishment of a national gas grid (NGG) The draft pipeline policy has proposed that NGG would be operated on an open access basis, and will be built/managed by GAIL. This could necessitate GAIL deploying capital to the extent of Rs 15,000 crore to Rs 18,000 crore over the next five to six years for setting up various pipelines forming part of the NGG.