EXPRESSION OF INTEREST

ENGAGING CONSULTANT FOR DEBT SYNDICATION OF KAKINADA – SRIKAKULAM PIPELINE (PHASE-2)

NOTICE INVITING EXPRESSION OF INTEREST (EOI)

Ref. APGDC / KSPL (PHASE-2) / LOAN / 2019-20 Date: 16.03.2020

ENGAGEMENT OF CONSULTANT FOR DEBT SYNDICATION OF KAKINADA – SRIKAKULAM PIPELINE PROJECT (PHASE-2)

(A) Introduction:

Andhra Pradesh Gas Distribution Corporation Ltd. (APGDC), a 50:50 Joint Venture of Government of Andhra Pradesh (represented by Andhra Pradesh Gas Infrastructure Corporation Ltd. – APGIC, Andhra Pradesh Power Generation Corporation – APGENCO & Andhra Pradesh Industrial Infrastructure Corporation – APIIC) and GAIL Gas Ltd. (100% Subsidiary of GAIL (India) Ltd., a Central PSU), has been incorporated on 10th January 2011 with an objective of designing / developing Natural Gas supply / Distribution Network, Gas Processing through Liquefaction / Re-gasification Plants and to import, store, transport & distribute Natural Gas in the entire state of Andhra Pradesh. The initial authorized Share Capital of APGDC is Rs. 500 Crore.

APGDC, in July 2014, was granted Authorization by PNGRB to lay, build, operate and expand Kakinada – Srikakulam Natural Gas Pipeline (KSPL). As per the terms of the Authorization, the Pipeline was to be commissioned within 36 months i.e. by July 2017.

While conceptualizing KSPL, (proposed) Kakinada FSRU & Gangavaram LNG Terminal were considered the main gas sources. However, due to various techno-commercial issues including Gas pricing / firm commitments for Terminal capacity utilization, proposed FSRU & LNG Terminal projects have not come up, thereby constraining APGDC to identify a reliable alternative Gas Source for KSPL prior to commencing the Project execution activities. Accordingly, initial project take off was delayed and APGDC could not complete the Project by July 2017.

Since KSPL was delayed for reasons beyond control of APGDC, APGDC approached PNGRB in July 2017 for extending the completion schedule of KSPL. Subsequently, PNGRB extended the completion schedule of KSPL up to December 2019 without imposition of any penalty. Though the Project was aimed to be completed by December 2019, on account of pre-occupation of Land Acquisition Officers (deputed in APGDC by Government of Andhra Pradesh) in concurrent electoral duties during Feb’19 to May’19, followed by heavy monsoon during June 2019 to October 2019, the project could not be completed by December 2019.

Subsequently, based on the representation of APGDC and the commitment expressed by the Promoters of APGDC (GoAP and GAIL Gas Ltd.), PNGRB has extended the completion schedule of KSPL (Phase-1) i.e. Kakinada – Visakhapatnam Pipeline up to June 2020 and that of KSPL (Phase-2) i.e. Visakhapatnam – Srikakulam up to June 2021. (B) Salient features of KSPL:

Date of Authorization 16-July-2014

Pipeline Network Main Line: Carrier : 24” / 18” x 249 Km Source-KG : 24” x 9 Km (by GAIL) Source-RLNG : 24” x 12 Km (by H-Energy)

Spur Lines (85 Km): Kakinada SEZ : 18” x 9 Km Vizag Consumers : 18” – 4” x 21 Km Other Consumers : 18” – 4” x 55 Km

Project Cost Phase-1 (Kakinada – Visakhapatnam Section) Excl. IDC & MM : Rs. 586.96 Cr. Incl. IDC & MM : Rs. 628.17 Cr. Phase-2 (Visakhapatnam – Srikakulam Section) Excl. IDC & MM : Rs. 416.56 Cr. Incl. IDC & MM : Rs. 442.67 Cr.

Scheduled Completion Original: July 2017 (granted by PNGRB) Revised: Phase-1: June 2020 / Phase-2: June 2021

(C) Route Map of KSPL:

(D) KSPL – Pipeline Schematic:

(E) KSPL (Phase-1) – Status:

The estimated Project Cost of KSPL (Phase-1) excluding IDC & Margin Money (estimated by Mecon Limited) is Rs. 587 Cr. and that including IDC & Margin Money is Rs. 609 Cr. (IDC & Margin Money estimation by SBI Caps) is Rs. 609 Cr.

As per the approval of the APGDC Board, the funds are to be arranged through 2:1 Debt Equity ratio. In line with the same, APGDC needs ~ Rs. 400 Cr. Term Loan from Banks. Based on the Term Loans obtained for KSPL (Phase-1) earlier, Andhra Bank has already extended the Rs. 200 Cr. Term Loan till June 2020. Extension of Rs. 200 Cr. Term Loan up to June 2020 by Bank of Maharashtra is under processing. The Term Loans for KSPL (Phase-1) have been obtained earlier on collateral security, in form of “Letter of Comfort” provided by Promoters of APGDC i.e. APGIC and GAIL Gas Ltd.

While requesting Banks for DCCO extension to facilitate loan drawl as per revised schedule approved by PNGRB, APGDC conveyed that PNGRB, the Regulator and authorized Body of Government of India, has already extended the completion schedule of KSPL earlier up to December 2019 without imposition of any penalty which establishes that the reasons for initial project take off delays (~3 Years) were beyond control of APGDC and hence the base date of Project completion shall be considered as December 2019 as per which no restructuring would be essential till December 2021. However, Andhra Bank has restructured the Loan while extending the DCCO up to June 2020 and Bank of Maharashtra is yet to process the same.

All the major Supply / Work Packages of KSPL (Phase-1) are awarded and the construction works are progressing currently with targeted completion by June 2020.

(F) KSPL (Phase-2) – Term Loan requirement:

The estimated cost of KSPL (Phase-2) is Rs. 442.67 Cr. including IDC & Margin money, which is to be arranged under 2:1 Debt:Equity financing model (Loan – Rs. 295.11 Cr. & Equity – Rs. 147.56 Cr.). The project is targeted to be completed by June 2021 as per following schedule:

• Completing Tendering and awarding activities by June 2020.

• Commencement of Construction works from September 2020 onwards.

• Mechanical Completion by May 2021.

• Commissioning and Gas-In by June 2021.

In view of the above, APGDC looks forward to availability of loan fund starting from August 2020 (when the Line Pipe delivery commences) till June 2021 when the Pipeline is commissioned.

In the context of Term loan arrangement for KSPL (Phase-1) as explained at (E) above, APGDC wishes to engage a Consultant for Debt Syndication for KSPL (Phase-2) with better terms. The Consultant is required to do all jobs associated with obtaining term loan from Banks including preparation of requisite reports / documents such as TEV, FAR etc. and coordinating with various Banks. APGDC will provide all requisite documents / details to the Consultant and will also accompany the Consultant in meetings with Banks wherever essential.

In view of the above, APGDC invites Expression of Interest from interested Consultants, who can provide requisite Debt Syndication services for KSPL (Phase-2) project in time-bound manner.

Interested Consultants are invited to APGDC Office, Visakhapatnam on 26.03.2020 at 1000 Hrs. along with their techno-commercial offers. All the interested Consultants are requested to make a brief presentation about their proposal covering following aspects:

• Organizational Details about the Debt Syndicating Agency

• Past experience of debt syndication services provided (documentary evidence would be essential and to be submitted for Technical evaluation of the Proposal by APGDC).

• Loan Terms that can be arranged (or proposed) by the Debt Syndicating Agency.

• Proposed timelines of various activities involved in Debt Syndication

• Any other relevant technical details the Debt Syndicating Agency proposes to convey.

All the Debt Syndicating Consultants are requested to bring their commercial offers in sealed envelopes. Commercial Offers of only those Consultants whose Technical Offers are accepted by APGDC will only be opened for further evaluation.

Commercial Offers of the Consultants shall cover only following:

S. No. Aspect Offer 1 Time required for arranging Loan ----- Days (from engagement of services by APGDC) 2 Assured Interest Rate ----- % 3 Assured Moratorium Period ----- Years (from DCCO) 4 Service Fee Rs. ---

The offers will be evaluated on weighted average score for each of the above aspect as below:

S. No. Aspect Weightage Evaluation 0.20 Lowest is 1 Time required for arranging Loan best 0.50 Lowest is 2 Assured Interest Rate best 0.10 Highest is 3 Assured Moratorium Period best 0.20 Lowest is 4 Service Fee best

The best among the bidding Consultants against each of the above mentioned Aspects will be assigned a score of 1 against that respective Aspect and scores of others against that Aspect will be normalized. Agency with lowest Combined Weighted Score will be selected.

Prospective Consultants to note that all the reports / documents generated for the Loan purpose will be the intellectual documents of APGDC and a copy of the same shall be handed over to APGDC at the time of generation. Further, Consultants must ensure confidentiality at all stages of the engagement.

Consultant will be paid as below for the services provided to APGDC:

• 25% upon receipt of in-principle sanction

• 60% upon receipt of final allotment letter

• 15% upon disbursement of first instalment of loan amount

Illustration for explaining the evaluation methodology:

S. Aspect Agency-1 Agency-2 Agency-3 No. 1 Time required for arranging Loan 90 Days 180 Days 60 Days 2 Assured Interest Rate 9 % 8 % 10 % 3 Assured Moratorium Period 2 Years 3 Years 4 Years 4 Service Fee Rs. 1.00 Cr. Rs. 2.00 Cr. Rs. 0.50 Cr.

With the above quoted parameters, normalized scores will be as below:

S. Aspect Agency-1 Agency-2 Agency-3 No. 1 Time required for arranging Loan 1.5 3 1 2 Assured Interest Rate 1.125 1 1.25 3 Assured Moratorium Period 1 1.5 2 4 Service Fee 2 4 1

Weighted Scores will be as below:

Agency-1: (0.2*1.5) + (0.5*1.125) + (0.1*1) + (0.2*2) = 1.36

Agency-2: (0.2*3) + (0.5*1) + (0.1*1.5) + (0.2*4) = 2.05

Agency-3: (0.2*1) + (0.5*1.25) + (0.1*2) + (0.2*1) = 1.23 Agency-3 will be selected

Techno-Commercial Offers in stipulated format (Annexure-1 & 2) shall be submitted by interested Consultants on 26.03.2020 in separate sealed envelope named “Technical Qualification Documents” & “Commercial Offer” to:

CFO, APGDC, 1st Floor, Ocean Park, D. No. 15-8-6/2, Varun Beach, Maharanipeta, Visakhapatnam – 530002

Commercial Offers of the technically qualified Consultants will only be opened for evaluation Annexure-1

Ref.: APGDC / KSPL (PHASE-2) / LOAN / 2019-20

Sub.: Engagement of Consultant for Debt Syndication of Kakinada – Srikakulam Pipeline Project (Phase-2) – Technical Qualification Documents

Past experience Documents enclosed (please tick appropriate choice):

(A) Proof of prior engagement in similar service:

- Copy of Work Order ( )

Or

- Letter / Order of Consultant Engagement issued by Clients ( )

(B) Proof of job completion by Consultant:

- Completion Certificate issued by Client for the Services rendered ( )

Or

- Copy of the final Loan Sanction Order from Bank ( )

Or

- Proof of payment received from Client ( )

(Authorized Signatory)

Annexure-2

Ref.: APGDC / KSPL (PHASE-2) / LOAN / 2019-20

Sub.: Engagement of Consultant for Debt Syndication of Kakinada – Srikakulam Pipeline Project (Phase-2) – Commercial Offer

S. Offer Aspect No.

1 Time required for arranging Loan ----- Days

(from date of engagement ) 2 Assured Interest Rate ----- % ----- Years 3 Assured Moratorium Period (from DCCO) 4 Service Fee Rs. ---

(Authorized Signatory)