Securitisation of power dues likely

Against the total outstanding of about Rs 29,000 crore as of now, the power companies could get as much as Rs 8,000 crore through issuance of power bonds by the government carrying an interest rate of 10.5 per cent. The remaining Rs 4,000 crore would be given to coal PSUs against their dues from the SEBs, sources said.

The securitisation proposal was held back due to announcement of elections and it was part of the 100 days agenda prepared by the power ministry after installation of Atal Bihari Vajpayee led National Democratic Alliance government last month. In case the proposal comes through, the power ministry would issue the bonds, backed by the Reserve Bank of India and these would be tradeable after the initial lock in period.

The power ministry has already held talks with the financial institutions about these bonds, which would also reduce the burden of the SEBs in terms of lower interest rates as against the commercial rate of 18 per cent levied on them by PSUs on the outstanding, sources said. The bonds were likely to be for a period of upto eight years. Finance Minister Yashwant Sinha had in his last budget speech announced that the government would securitise dues of various central power utilities to ease the pressures emanating from mounting receivables.

Outlining the `100-day agenda’ for his ministry to spur reforms and implementation of projects in both public and private sector, Union Power Minister P R Kumaramangalam had earlier said that the bonds would help clean the balance sheets of the PSUs.

Stating that an annual investment of upto Rs 6,000 crore, including budgetary support of Rs 3,000-4,000 crore, would be made to overcome the power shortage, he said "we were about to send the proposal for clearance of dues of Rs 12,000 crore through securitisation when elections were announced."Meanwhile, State Bank of India has signed an agreement for extending the single largest term loan of Rs 750 crore to the National Thermal Power Corporation for part financing its massive expansion program.

The loan will be drawn by NTPC in three years including the current fiscal. It will be repaid in ten years with a moratorium period of three years. NTPC would need an investment of Rs 50,000 crore for becoming a 30,000 MW generating company.