Us Exim Bank Signs Three Mous For Financing Imports

The US Exim Bank yesterday signed three separate MoUs with the Managalore Power Company, Escotel Mobile Communications and Hughes Network Systems to finance imports worth about $700 million.

The Escotel deal, involving the purchase of equipment from Lucent Technologies, is Exim banks first private sector telecommunications transaction and is likely to be the trendsetter for several other such projects in the sector.

Disclosing this, Exim Bank vice-chairperson Jackie M Clegg said the bank was moving away from sovereign guarantee-based lending and diversifying into project financing in India. She said within the next few months, the first deal of this nature would be signed. These projects in the private sector will not entail any government guarantee.

 

The accords with the three companies were signed by Clegg, in the presence of US commerce secretary William Daley, senator Paul Sarbanes and company representatives.

Clegg will, over the next few days, meet the chief ministers of West Bengal, Orissa and Kerala as part of the banks efforts to explore upcoming private sector ventures in the infrastructure sectors. Clegg yesterday met Andhra Pradesh chief minister Chandrababu Naidu and was impressed by the range of projects on offer.

According to Clegg, while $1.5 billion in import deals were financed last year another $6 billion was in the pipeline involving projects in power, telecom, cement and steel.

With its focus gradually shifting towards project financing, the Exim bank is exploring options of utilising the services of domestic rating agencies to assess the financial health of state governments. We have had several meetings with Crisil. We are also exploring options like the use of an escrow account as a safeguard, Clegg said.

The Exim Bank MoU with Hughes Network Systems is for two telecom projects in Maharashtra and Karnataka entails project financing (varying between $175 to $275 million) on a limited recourse basis.

Under the Exim Banks limited recourse project financing programme allows it to provide financial support to credit worthy projects without the need for sovereign, corporate or financial institution guarantees.

A similar financing structure is being envisaged for the Mangalore Power project, being co-promoted by Cogentrix Energy Inc, USA. The Exim Bank expects its share of the financing to be in the region of $400 million. And, unlike the Dabhol project where the US Exim lent $298 million on the basis of guarantees by FIs there wont be any guarantees by domestic institutions.