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Wednesday, Dec 04, 2002

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Essar Power prepays UTI Rs 37-cr loan

Our Bureau

MUMBAI, Dec. 3

ESSAR Power Ltd today said it has prepaid non-convertible debentures worth Rs 37 crore to the Unit Trust of India, raised in 1997 at 20 per cent to finance the company's 515-MW plant at Hazira, three months ahead of schedule.

According to the company, the pre-payment is part of its "initiative to reduce cost of finance and thereby tariff." The company has already reduced its variable costs by 18 per cent by obtaining exemption on naphtha purchases. Costs went down further when Essar obtained sales tax exemption on naphtha. The plant has now shifted to using natural gas.

The company said in a news release that it has renegotiated term loans and has reduced interest rates by six per cent from 20 per cent at the time of borrowing in 1994-95. Essar Power has reduced its debt-equity from 2.07:1 at the time of commissioning to 1.40:1. According to the release, Essar Power has brought down its tariff rates from Rs 4.55 per unit to Rs 3 per unit.

Company officials said the company has long-term loans worth about Rs 1,260 crore on its books borrowed in the form of two rupee term loans from banks and financial institutions, one foreign currency loan from FIs, external commercial borrowings and US Exim. The company is paying 14 per cent interest on these loans.

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