Premium
This is an archive article published on May 28, 2005

Power Grid Corp for review of guarantee fee

The ministry of power is considering Power Grid Corp’s (PGC) proposal to review the current guarantee fee charged for outstanding multi...

.

The ministry of power is considering Power Grid Corp’s (PGC) proposal to review the current guarantee fee charged for outstanding multilateral loans.

The proposal, which has been put forward by the central transmission utility, says the present 1.2 per cent fee on outstanding balances of multilateral loans doubles the cost of borrowings needed for their transmission projects.

Confirming this, senior PGC executives also told The Indian Express that the corporation has asked the ministry of power to change their present mini-ratna status to that of a navratna company which would then enable them to get speedy clearences.

Story continues below this ad

Power Grid has 14 critical transmission projects in the pipeline needing an investment of over Rs 16,000 crore. The total length of the transmission projects stands at around 21,083 circuit kilometers and includes links for critical power ventures such that of Kawas II and Gandhar II.

On the issue of guarantee fee, the ministry of finance had earlier rejected a blanket waiver of the guarantee fee but was open to individual cases. In that light, PGC has now sought the power ministry’s assistance to take up the matter with the finance ministry.

Sources pointed out that the need for a review is based on the PSU’s track record of timely repayment. Incidentally, the ministry of finance charges such a fee to meet the risks on account of any delays in repayments.

PGC sources observed that the current investment approval process consumes a substantial part of the execution time of the projects and sometimes also becomes difficult to match the commissioning of evacuation systems with the generation projects, especially of those like NTPC.

Story continues below this ad

In that regard, PGC has asked the government to bring the transmission company at par with NTPC and make it a navratna too. At present, PGC is accorded a mini-ratna status under which their board of directors have the powers to clear investments to the tune of Rs 300 crore as long as they are not a contingent liability on the government of India.

However, some of the loans/borrowings of PGC go beyond this and getting appropriate approvals takes time.

Latest Comment
Post Comment
Read Comments
Advertisement
Advertisement
Advertisement
Advertisement