The Uttar Pradesh government has rejected the efforts of Credit Rating and Information Services India Ltd (Crisil) to give a credit rating to the state for investment purposes and repayments.
It has, however, agreed to let Crisil give a rating to the Uttar Pradesh State Electricity Board (UPSEB).
This follows the demand from the Industrial Development Bank of India (IDBI) that both the state and the UPSEB should get a credit rating from Crisil to enable the financial institution to take a final decision on the loan application of Indo Gulf fertilizers for its Rosa power project.
The UP government's argument is that a government is a sovereign authority and it cannot be rated the way a company is. Further, it feels that that there are plenty of secret documents of a state which cannot be made public.
The thinking in the state government is that this refusal is not going to affect IDBI's decision. This is especially so because even after giving UPSEB a low rating, there has been no problem for the board to get further loans.
The Rosa project authorities, who are acting as facilitators for Crisil are trying to soft pedal the impact of this refusal.
They point out that although there shall not be any official or recognised rating, but nevertheless sufficient material has been provided to Crisil so it can reach some conclusions on the future projections of the state government and its repayment position.
However others in the government point out that rating part is totally redundant till it is accepted by the state government.
While these discussions are on, a UP government delegation has visited Bombay and met the IDBI brass for the purpose of finalising the loan for the Rosa project by the end of this month.
The delegation is optimistic about the outcome.
It has become specially important for the estate to have a cordial relations with the IDBI so that it could persuade the latter to finance some of the other power projects in the state.
It has already achieved success in case of Vishnu Prayag hydro power project being implemented by Jaiprakash Industries.
The coal-based Rosa Power project, which will have a capacity of 567 mw (283.5x2) in the first phase, is set to go to the UP cabinet for formal ratification of the PPA signed in December 1996. The MoU for the project was signed with the government five years ago in 1993.
A copy of these documents has already been made available to the IDBI, and now only ratification is left to be completed.
The Rosa power project is based on 70:30 debt equity ratio and at Rs 4 cr per mw, the project is likely to cost about Rs 2,500 crore.
Power Finance Corporation has already agreed to give loans of Rs 500 crore and the IDBI-led consortium is likely to chip in with a loan of Rs 1,500 crore.
