Teesta project gets Rs 750 cr Central cover

NHPC chairman and managing director Yogendra Prasad said that the Nexi facility has been introduced in the country for the first time. ‘‘The loan agreement for this credit facility is being signed between NHPC and Deutsche Bank in Tokyo on October 18,’’ he said.

Prasad said an important aspect of this untied credit facility is that unlike the financing by an export credit agency, which is available for 85 per cent of the import content only, the Nexi facility can be used even for Indian expenditure of the project. ‘‘The $150 million has been negotiated in Japanese yen for 16 years and will be paid in 20 equal semi-annual installments. Interest rate for the facility is six month Libor (for Japanese yen) plus 57 basis points which amounts to around 0.67 per cent per annum,’’ Prasad said.

The all-in-cost for this credit, after taking into account the exchange rate variation of around 3.5 per cent along with credit insurance fee, management fee, the Nexi guarantee fee of 0.7 per cent and the Central guarantee fee of 1.2 per cent, works out to be around 7 per cent per annum.

Earlier, the finance ministry had been reluctant to extend any sovereign guarantee for this facility. While the finance ministry has agreed to extend the Central guarantee for this credit facility, it has asked NHPC to adopt appropriate instruments for minimising exchange rate variations, sources said. NHPC officials informed that a ‘sensitivity analysis’ has been carried out in respect of this facility taking the average exchange rate variation of the Japanese yen versus the rupee for the past five-and 10-year period.

The average exchange rate variation comes to 3.66 per cent for five years and 3.925 per cent for nine-year period (variation for 1992 is not available).

As per this analysis, the all-in-cost for the proposed credit after considering five years average exchange rate variation comes to 7.08 per cent and based on nine years average it works out to be 7.39 per cent. At these rates, the cost of the Teesta project will come down by Rs 100 crore, resulting in a substantial tariff reduction.

The Rs 2,730-crore Teesta-V is being funded with a debt-equity ratio of 1:1. Out of the debt component of Rs 1,365 crore, around Rs 750 crore has been tied up under the Nexi credit facility while the balance Rs 600 crore will be tied up with domestic financial institutions and banks.