Financial Daily from THE HINDU group of publications
Thursday, Jul 11, 2002
Financial Daily from THE HINDU group of publications Thursday, Jul 11, 2002 |
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Industry & Economy
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Power ADB to shift Gujarat power reforms loan Vinod Mathew
GANDHINAGAR, July 10 THE Asian Development Bank, as per the request of the Central Government, has agreed to shift the $350 million Gujarat power reforms loan from under the umbrella of its pool-based single currency lending service to the LIBOR-based facility. However, the conversion of the loan amount would hold good only for the undisbursed loan amount of $ 300 million, the ADB having disbursed the first tranche of $ 50 million for the Gujarat power sector reforms on December 15, 2000. According to the `Amended and Restated Loan Agreement' dated April 26, 2002 the LIBOR rates would mean an automatic reduction in interest rates for the Gujarat government to the tune of four per cent. Though the Indian Government would get the ADB loan at LIBOR rates, which hovers in the 2-3 per cent range, it would extend the same to the Gujarat Government at only 7-8 per cent, the rest being its risk cushion. The Gujarat Government's repayment commitment on the $ 50 million loan already availed works out at around 12 per cent. The State Government, which is yet to sign its consent to the amended loan agreement, is expected to give its nod in a matter of days as it has been awaiting the second tranche of $50 million for quite some time. However, the ADB is understood to be firm that Gujarat first ushers in the long-pending power sector reforms Bill before further loosening its purse strings. Featuring prominently in the proposed Bill is the restructuring of the Gujarat Electricity Board into eight individual profit centres, with the ADB itself taking up two circles in Mehsana and Surat on a pilot basis. While the Manila-based agency has earmarked $150 million out of the loan amount for reorganising the GEB, $ 200 million would go into the modernisation of transmission and distribution equipment in the State power sector.
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