Financial Daily from THE HINDU group of publications
Tuesday, Dec 20, 2005
Deutsche Bank, Depfa Bank of Ireland agree to offer loan
Raja Simhan T.E.
Mr N.K Raghupathy, CMD, Sethusamudram Corpn.
Chennai , Dec. 19
DEUTSCHE Bank and Depfa Bank Plc, an Irish company, have agreed to provide foreign commercial loans for the Sethusamudram Ship Canal Project (SSCP), according to Mr N.K. Raghupathy, Chairman and Managing Director, Sethusamudram Corporation Ltd.
"We wanted to raise around $100 million (Rs 450 crore) abroad but got offer for 200 per cent," he told Business Line.
Similarly, seven banks Indian Overseas Bank, Syndicate Bank, HDFC, Corporation Bank, Tamil Nadu Mercantile Bank and Jammu & Kashmir Bank have agreed to provide rupee term loan for the project.
The interest rate is 7.5 per cent, and it would be revised after five years. The repayment period is 12 years with five years of moratorium.
The foreign currency loan repayment period is 20 years with eight-year moratorium, he said.
It may be recalled that the corporation, which is a special purpose vehicle implementing the project, appointed UTI Bank to handle the financial arrangements for the project.
The bank was selected through a competitive tendering process as the `arranger' of funds, including the rupee and foreign currency loans, and will handle the public issue or private placement, if any.
The entire cost of the SSCP is estimated at Rs 2,427 crore, which includes the project cost of Rs 2,233 crore and the balance constituting the financial cost and interest during the construction period.
The debt equity would be 1.5:1. Out of the project cost, foreign currency loan would be 30 per cent, rupee term loan of 30 per cent and rest would be zero coupon bonds, he said.
The equity component would be Rs 971 crore with the Union Government taking a 51 per cent stake of Rs 495 crore.
The balance would be shared between the Tuticorin Port Trust and Shipping Corporation of India, which would each contribute Rs 50 crore and the other five partners Chennai Port Trust, Ennore Port, Visakhapatnam Port Trust, Paradip Port Trust and the Dredging Corporation of India would bring in Rs 30 crore each.
The project envisages dredging a 167-km channel along the Palk Straits, the Palk Bay and Adam's Bridge between Sri Lanka and India to connect the Bay of Bengal and the Gulf of Mannar.
This would enable ships take a shorter route between the two countries instead of having to sail around Sri Lanka.
The project involves dredging about 82.5 million cubic metre of soil, which is expected to take about 30 months.
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