Total deal size is expected to be around $9.2 billion.
The French line of credit for two EPR reactors of Nuclear Power Corporation Ltd at Jaitapur in Maharashtra will come along with sovereign guarantees from the French and Indian governments. The extent of guarantee will depend on what portion of the cost the French credit will cover.
While NPCIL will buy two reactors from French energy major Areva, the Department of Atomic Energy will sign a separate agreement with the company for supply of uranium. The total deal size is expected to be around euro 7 billion ($9.2 billion). “NPCIL will access export credit for the imported components of the reactors. The loan will come with the French government guarantee and also sovereign guarantee from India, so it will have lower interest rate,” Areva India Chairman and Managing Director Arthur de Montalembert told Business Standard. He clarified the financing deal was being negotiated between NPCIL and a consortium of French institutions separately.
A senior NPCIL executive confirmed the company would avail of a sovereign guarantee from the Indian government for funding the deal. “The supply of Russian reactors for the Kudankulam plant in Tamil Nadu is getting 85 per cent funding from the Russian institutions. The French deal will be similar,” he added.
The interest rates and other terms of agreement for the French deal would be governed by the Organisation for Economic Cooperation and Development norms. OECD norms stipulate that the minimum interest rates would be applicable for officially supported export credits. Under the arrangement, commercial interest reference rates (CIRRs) are fixed for each currency of the participants to the arrangement. CIRRs are set on the 15th of each month. “This rate will be the base rate for the credit along with a bank commission,” said the executive.
Areva and NPCIL would sign about a dozen contracts to finalise the deal in about six months. Areva Chief Executive Officer Anne Lauvergeon had earlier this month said the NPCIL deal was worth about euro 7 billion, including the two reactors and uranium supply for 25 years, and the two sides were in the process of tying up funds pending certain issues. “The interest rates have to be fixed as they would determine the electricity rates,” she had said.