WBSETCL to raise Rs 300 cr through bonds

West Bengal State Electricity Transmission Company Limited (WBSETCL) may raise about Rs 300 crore through bonds this financial year.

The proceeds would be used to fund its capital expenditure plans over the next three-four years.

The average capital expenditure during the next three-four year by WBSETCL is likely to be around Rs 500 crore, which is expected to be funded through a normative debt and equity ratio of 70:30, according to the rating rationale of the proposed bond issuance by ICRA.

The equity requirement for the proposed capital expenditure will be met through a mix of internal accruals and grants from the state government, if required.

In addition to ICRA, rating agency CARE has rated the bond issuance programme.

While ICRA has rated the issue as LA, CARE has rated the issue as A, which means that both the agencies conferred “adequate safety” for timely servicing of the debt instrument.

Last year, WBSETCL had proposed to raise about Rs 200 crore through bonds at a rate of interest of 9.75 per cent. According to sources, the company had placed the bonds only few months back.

The WBSETCL spokesperson could not be reached to comment on the issue.

“The rating reflects the company’s status as the transmission licensee in the state of West Bengal, low business risks arising from the regulated nature of operations based on ‘cost-plus’ based tariff principles and its track record of efficient operations. The ratings also factor in the strategic importance of the utility to the Government of West Bengal,” according to rating rationale by ICRA.

However, the large capex plans of the utilities would imply continued reliance on debt and the currently moderate debt servicing indicators. The company is also exposed to the counter party credit risks of its sole customer, West Bengal State Electricity Distribution Company Limited (WBSEDCL) while distribution losses of WBSEDCL continue to remain much higher than allowed, according to the ICRA rationale.