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Hudco roped in for Gridco loan plan

Mohan Padmanabhan

Kolkata , Feb. 14

POWER sector reforms in Orissa is set to get a major fillip with Housing and Urban Development Corporation (Hudco) agreeing "in principle" to subscribe to a Grid Corporation of Orissa Ltd (Gridco) first phase term loan programme of Rs 600 crore in its entirety. The Gridco loan programme enjoys the State guarantee of Rs 1,000 crore.

Srei Capital Markets, a wholly-owned subsidiary of Srei International Finance, has been given the mandate for the term loan syndication for the entire Rs 600 crore. Gridco proposes to raise Rs 600 crore in the first phase by way of a term loan at lower rate of interest to repay its existing high cost borrowings, namely redemption of the Gridco power bonds, Power Finance Corporation and Rural Electrification Corporation loans. According to informed merchant banking sources, the payment of interest would be quarterly and the contribution towards redemption of the principal amounts will be made through an escrow account, from the revenues to be generated on account of supply of power by Gridco to industrial, commercial and institutional consumers.

Confirming this development to Business Line, Mr Malay Chatterjee, regional head of Hudco, said an in-principle decision has been taken to subscribe to the entire quantum of Rs 600 crore. Asked why an urban infrastructure funding body like Hudco was now going for such large power sector funding, Mr Chatterjee said the housing segment was getting too crowded, and under any case, "we have already participated in smaller loan programmes of Uttar Pradesh and Rajsthan government power facilities."

Mr Chatterjee said such participation in Gridco's term loan programme might well kick-start the State sector power reforms in a big way.

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