To reduce the fiscal deficit, the Centre is encouraging leading public sector undertakings (PSUs) to retire high-cost loans contracted several years ago.
National Thermal Power Corporation (NTPC), National Hydr-oelectric Power Corporation (NHPC) and Shipping Corporation of India (SCI) have initiated the process of refinancing high-cost government debt of about Rs 2,300 crore. Indications are other PSUs, including IOC, also plan to prepay, taking advantage of low interest rates.
While NTPC has drawn up plans for retiring debt of about Rs 1,600 crore over the next two to three years, SCI has tied up with a public sector bank to borrow at lower rates to enable prepayment of a part of its outstanding Rs 250 crore.
NHPC has retired about Rs 430 crore in the current fiscal through bond issues. The PSU was given a special approval for this, officials said.
Senior NTPC officials said the corporation had sought a formal clearance from the Centre for the prepayment of loans through fresh borrowings at lower rates of interest from the domestic market.
