Power firms raising debt for expansion

 The National Thermal Power Corporation (NTPC), the National Hydroelectric Power Corporation (NHPC) and Powergrid Corporation of India Ltd (PGCIL) plan to leverage insurance money in a big way for the purpose and are in the process of raising over Rs 10,000 crore from the Life Insurance Corporation (LIC).

 While NTPC has approached financial institutions and insurance companies to raise Rs 7,000 crore debt in the form of Rs 4,000 crore term loans and to issue bonds of Rs 3,000 crore, NHPC has tied up long duration loans of Rs 2,500 crore from LIC.

 PGCIL is raising Rs 900 crore to finance its expansion plans, institutional sources told Business Standard.

 NTPC proposal envisages a payment period of over 30 years and has proposed interest rate on term loans at 100 basis points over the government security yield. For the bonds, the coupon rate proposed will be 90 basis points over the G-sec yield.

 NHPC, which has been entrusted with the task of adding 4357 MW of hydroelectric generation capacity during the Tenth plan at an approved investment of Rs 32,226 crore is also borrowing around Rs 2,500 crore from LIC, at an average interest rate of 9.25 per cent, for its projects coming up in Himachal Pradesh and Uttaranchal, the sources said.

 NTPC