NTPC plans to raise $300-mn syndicated loan

India’s largest power generator NTPC Ltd plans to raise a syndicated loan of $300 million (over Rs 1,380 crore) to finance its ongoing capacity addition initiatives.

A senior management team of the state-run power major last week held meetings with foreign banks to discuss the timing for mobilising the proposed loan. The move is crucial for NTPC despite it has cash reserves worth Rs 18,000 crore. NTPC has proposed capex of Rs 29,000 crore for the current year. The company, with an installed generation capacity of over 30,000 Mw, is currently engaged in adding capacity of 22,000 Mw by the end of the Eleventh Five-Year Plan.

An NTPC official, who did not want to be quoted, told Business Standard: “The board has already given its clearance to raise a syndicated loan of $300 million essentially through external commercial borrowing (ECB). The company can go in for ECB of $500 million. Foreign banks and lenders have projected that the loan can be available at the interest rate of around 3 per cent.”

The official said the management team held discussions with the representatives of HSBC, KFW, Deutsche, UBS, Standard Chartered, City Bank and Bank of Tokyo & Mitsubishi.

The official also informed that NTPC had already prepared a war chest of around Rs 1.6 lakh crore for the next five years.

A representative of a foreign bank, said NTPC had the highest credit rating and its balance sheet is quite strong. Therefore, it won’t be a problem to raise the $300 million despite the current European crisis. “The good news is that the US economy is reviving,” he noted.

During 2008-09, NTPC had raised term loans of Rs 11,575 crore from banks and financial institutions and raised bonds worth Rs 1,900 crore. In the next financial year, it tied up the corporate loan of Rs 8,500 crore with a public sector bank and had signed loan agreements of Rs 4,850 crore with domestic lenders.