Rs 6,500 cr LIC loan to NHPC

The National Hydroelectric Power Corporation (NHPC) yesterday signed an agreement with the Life Insurance Corporation (LIC) for drawing a line of credit of Rs 6,500 crore.

The fund will be used for the central power utility's 2,000 Megawatt (Mw) Subansiri project in Arunachal Pradesh, the 120 Mw Sewa-II project in Jammu and Kashmir and the 132 Mw Tista project in West Bengal.

"This is the highest-ever tie-up for NHPC from a single lender to meet the funding requirement through the debt route," NHPC Chairman and Managing Director Yogendra Prasad said, after signing the MoU with LIC chairman SB Mathur here. This agreement takes LIC's total exposure in the company to Rs 9,000 crore.

The interest rate on the loans is linked to 13-year government papers, which works out to about 6.8 per cent. The overall tenure of the loan is 20 years with a moratorium of eight years and repayment in 24 equal instalments during the next 12 years.

LIC has also reduced its interest for the existing Rs 2,500 crore loans to NHPC, taken in 2002-03, by 1.25 per cent resulting in a savings of Rs 250 crore to the corporation.

Apart from loans from LIC, NHPC has also raised another Rs 300 crore from banks, including the State Bank of Patiala, Canara Bank and Indian Bank, at an interest rate ranging between 6.25 and 6.75 per cent.

The corporation had also recently raised $50 million (about Rs 228 crore) through an external commercial borrowing programme, SK Garg, NHPC's director-finance said.

NHPC is currently executing eight projects with a total capacity of 4,322 Mw, which require about Rs 11,140 crore debt.

"With the sanction of Rs 6,500 crore from LIC, the total debt requirement for these projects stands tied up," Prasad said.

Specifying the roadmap for the corporation till 2012, Prasad said it would require Rs 1,00,000 crore, of which Rs 40,000 crore would come as budgetary support while the balance would be raised from domestic and overseas sources.

---

Power equations

• NHPC will use the fund for the 2,000 Mw Subansiri project in Arunachal Pradesh, the 120 Mw Sewa-II project in Jammu and Kashmir and the 132 Mw Tista project in West Bengal.
• The interest rate on the loans is linked to 13-year government papers, which works out to about 6.8 per cent.
• LIC's total exposure in the company now stands at Rs 9,000 crore.
• NHPC had recently raised $50 million (about Rs 228 crore) through an external commercial borrowing programme.