WBPDCL does a loan-equity swap

West Bengal Power Development Corporation Ltd (WBPDCL) has decided to prepay advances received from the state government over the last few years for erection of power plants in the state.

WBPDCL owes around Rs 3,000 crore to the state government. It will prepay around Rs 550 crore initially in the first three years. Unpaid interest is around Rs 500 crore.

The amount prepaid by WBPDCL in turn will be ploughed back by the state government into WBPDCL in the form of fresh equity for funding new power projects.

In a parallel development. WBPDCL decided to pay around Rs 99 lakh to the state government as its maiden dividend. The decision was taken at a board meeting held in the city today.

WBPDCL registered a Rs 9.13 crore net profit for 2003-04.

Announcing the company's intention to clean up its balance-sheet position at a press conference, state power minister Mrinal Banerjee said, "Initially WBPDCL will prepay Rs 550 crore of loan to the state government over a period of three years. This in turn will be ploughed back by the government as fresh equity in projects of around 2750MW of fresh generation capacity. This will require additional Rs 5,500 crore."

WBPDCL was prepaying the government Rs 550 crore. The government in turn was required to pump in 10 per cent of the new project cost as equity, which works out to Rs 550 crore.

This would also ease the burden on the state government, which is cash strapped.

The power company has decided to fund 90 per cent of the new project cost through debt against 10 per cent fresh state government equity.

WBPDCL has tied up with Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) for project funding. The PFC loan is at 3 per cent under a special scheme.

WBPDCL expansion plans include two 210MW units at Bakreswar, two 300MW plants at Sagardighi and one 250MW unit at Santaldih.