Gridco to avail Rs 500-cr loan from OMC

State run power trading firm Gridco is set to avail Rs 500 crore as short-term inter-corporate loan from mining PSU Odisha Mining Corporation (OMC). Gridco would repay the loan over a period of seven years at an interest rate of 10 per cent.

The state energy department has approved Gridco's proposal to this effect.

“The government has been pleased to allow Gridco to borrow a sum of Rs 500 crore from the OMC as a short-term inter corporate loan to meet the current financial gap,” C P Mohanty, additional secretary (energy) wrote to Hemant Sharma, chairman and managing director of Gridco.

A senior Gridco official said, “We are borrowing from OMC to partly clear our mounting dues and also to swap some high cost loans. The rate of interest on the loan will be 1.5 per cent premium over the fixed deposit interest rate of State Bank of India (SBI) which comes to approximately 10 per cent.”

OMC is sitting on a surplus of over Rs 5,000 crore on the back of profitable mining operations in iron ore and chrome ore.

Meanwhile, the cash strapped Gridco is looking to bolster its earnings through trading surplus power.

“Gridco has already raked in nearly Rs 500 crore from power trading in this fiscal. We expect that our earnings from sale of surplus power will yield Rs 800 crore by the close of 2013-14. Heavy rains have led to glut in hydro power generation and sale of this surplus power will boost our earnings,” the Gridco official said. In December 2012, Gridco had borrowed Rs 500 crore from OMC mainly to pay off the dues of Vedanta Group. The group had raised a demand of Rs 744 crore on the bulk power purchaser for supply of electricity to the state grid from its coal-fired plant and captive power plant.