The state-owned Karnataka Electricity Board (KEB) is planning to float a second tranche of bond to mop up Rs 300 crore to finance its transmission and distribution (T&D) works.
We are waiting for the market to improve before we fix up a date, a top KEB official told Business Standard. He said KEB was looking at raising close to Rs 300 crore through the bond.
KEB is planning to invest around Rs 600 crore in the immediate future. It plans to go through a major restructuring programme which envisages partial privatisation of the board.
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The first tranche of Rs 100-crore non-convertible bonds programme with an interest rate of 13.4 percent, floated last year attracted a huge response and closed much before the due date of October 15. It was also guaranteed by the state government.
The bond which received LAA-(SO) rating by Indian Credit Rating Agency (ICRA) indicating high safety with regard to timely payment of servicing obligations under the bonds, was for part-financing ongoing capital expenditure on T&D works in Karnataka.
The first tranche of bonds was structured to provide a support mechanism to ensure timely repayment of principal and interest on the bonds. The structure was formalised through a tripartite agreement among the Karnataka Government, KEB and a trustee appointed by the board.
According to ICRA report, KEBs T&D losses are in the range of 18.5 percent over the last three years and are lower than the all India average of around 20 percent. The Karnataka Government is upgrading the T & D network in the state to reduce energy losses.
The report said the demand for power in Karnataka is likely to grow at over 8 percent per annum. It said the state governments initiative on increasing the power generating capacity would start yielding results only in the next 18 to 24 months.
With most of the power generating capacity in future being through the thermal route, the states dependence on monsoons would start reducing.