Financial Daily from THE HINDU group of publications
Friday, Apr 16, 2004
Industry & Economy
Money & Banking - Life Insurance
LIC extends Rs 6,500-cr line of credit to NHPC
Balaji C. Mouli
Mr Yogendra Prasad, Chairman and Managing Director, NHPC, with Mr S.B. Mathur, Chairman, LIC, after signing an MOU in the Capital on Thursday. Kamal Narang
New Delhi , April 15
LIFE Insurance Corporation (LIC) on Thursday sanctioned a line of credit of Rs 6,500 crore to National Hydro-electric Power Corporation (NHPC).
"This is the highest ever tie-up for NHPC from a single lender to meet funding requirement through debt for a host of projects sanctioned recently by Government," NHPC Chairman and Managing Director, Mr Yogendra Prasad said after signing a Memorandum of Understanding (MoU) with LIC Chairman, Mr S.B. Mathur here.
With this loan agreement, LIC's total loan exposure has risen to Rs 9,000 crore. The funds would be utilised for the setting up of the 2,000 MW Subansiri project in Arunachal Pradesh, 120 MW Sewa-II project in Jammu & Kashmir and the 132 MW Tistha project in West Bengal.
The interest rate on the loans is linked to 13-year government paper. This works out to about 6.8 per cent. The tenure of the LIC loans is 20 years with a moratorium of eight years and repayment in 24 equal instalments in the next 12 years.
The insurance major has also reduced the interest rate for the existing Rs 2,500 crore loans to NHPC. The interest rate on the loans, taken in 2002-03, has been reduced by 1.25 per cent resulting in a savings of Rs 250 crore to NHPC.
NHPC is currently executing eight projects with a total capacity of 4,322 MW. This involves a debt of Rs 11,140 crore.
"With the sanction of Rs 6,500 crore from LIC, the total debt requirement for these projects stands tied up," Mr Prasad said.
NHPC has also approached the World Bank to fund a few of its projects aggregating around 2,000 MW.
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