The new ECB policy announced by the Centre last week will require state-run public sector undertakings, like National Thermal Power Corporation (NTPC) and Power Finance Corporation (PFC), to raise funds on the strength of their balance sheet.
Confirming this, official sources said such a policy would not affect corporations like PFC, but could hamper the fund-raising ability of the NTPC.
Under the new policy, the public sector undertakings can no longer use the sovereign cushion of raising funds from the international market. In the light of the divestment programmes being carried out by the Centre, this policy is aimed at disallowing public sector companies from using sovereign cushion to raise funds.
Officials said PFC had already got an independent rating carried out and was given a rating equal to the sovereign rating for its foreign borrowings. They further said, since PFC's recovery rate was extremely high (more than 90 per cent), the corporation would not face any hurdles in raising the funds.
Officials, however, said companies such as NTPC which have very high outstandings from the state electricity boards were likely to get affected. At present, NTPC has more than Rs 8,000 crore funds outstanding from various state electricity boards.
NTPC is planning a mix of ECB funds as well as domestic borrowings for financing it's power projects, including the Kawas and Gandhar power projects with a capacity of 650 mw each. NTPC is presently finalising the bids for these gas-based power projects.
Under the fund-raising package, NTPC is planning to mobilise up to Rs 600 crore from the domestic market as part of its resource mobilisation plan this year. This will be used to fund its various on-going power projects including the 1,000 mw Simhadri power project in Andhra Pradesh and the 500 mw Vindhyachal power project.
The corporation has also tied up a credit line to the tune of Rs 5,000 crore with various commercial and financial institutions to fund the power projects in the long run, they said adding that the corporation would use these funds over next the four to five years.
NTPC has reached an agreement with the SBI to lend Rs 1,200 crore at an interest of 12.5 per cent, to be repaid over ten years. The ICICI, on the other hand, will lend Rs 1,000 crore while IDBI will lend another Rs 1,500 crore. Balance funds will be raised from banks such as HDFC (Rs 500 crore) and UCO Bank (Rs 300 crore).
