By IANS,
Chennai : To reduce its interest burden, NLC Tamilnadu Power Limited (NTPL) has decided to foreclose its loan account with Rural Electrification Corporation (REC) and go in for a mix of bank loan, external commercial borrowing (ECB) and bond issue.
The NTPL, a 89:11 joint venture between Neyveli Lignite Corporation Limited (NLC) and Tamil Nadu Electricity Board (TNEB), is setting up a 1,000 MW thermal power project in Tuticorin, around 600 km from here. The Rs.4900-crore project, to be commissioned during 2012-13, has a 70:30 debt-equity mix.
“We are closing the REC loan account and going in for a cheaper bank loan to save on the interest cost. We will be repaying whatever we have drawn from REC along with prepayment premium. We will also go for an ECB and bond issue,” NLC Chairman and Managing Director A.R. Ansari told IANS.
NTPL and REC had inked a loan agreement for Rs.3,437 crore in 2008. NTPL has drawn Rs.271 crore till date.
According to him, the company will now avail loan from a Bank of Baroda-led consortium.
“We have negotiated with nationalised banks a Rs.2,500-crore loan for eight years at a 9.7 percent interest rate whereas the interest rate on REC loan is 11 percent,” a NLC official told IANS on condition of anonymity.
“The total savings for NTPL by this loan swap will be more than Rs.100 crore in the long run and hence the foreclosure decision. In 2008, REC’s loan was competitive. But now funds at much cheaper rates are available,” he added.
A REC official confirmed the development.
While the consortium will loan only Rs.2,500 crore repayable over the eight-year period, NTPL will raise the balance funds from an ECB issue (around Rs.500 crore), commercial paper and bond issue.