US, Indian firms sign deals worth $ 2 billion

Enron Energy Marketing Services, a wholly-owned subsidiary of US energy giant Enron Corp, and Ispat Energy Ltd signed the agreement to purchase 49 per cent equity in 354-mw Ispat Energy Ltd from the present promoters, the Mittals. Both companies did not disclose the price at which the stake has been picked up by Enron.

Enron also signed a gas sales agreement (GSA) whereby Enron will supply natural gas to Ispat’s captive power plant currently under development at Dolvi in Maharashtra.

Under the terms of the GSA, Enron will supply 0.2 million tonnes per annum of LNG over a 20-year period to Ispat Energy, a company release said here today. Gas deliveries are expected to start in the third quarter of 2002, it said, adding the gas will be transported from Enron’s LNG-processing terminal at Dabhol via pipeline to Ispat’s plant in Dolvi, whose financial closure is expected in the second quarter of this year.

“The signing of the agreement is an important milestone in our gas marketing efforts and will allow us to supply the environment friendly fuel to Ispat,” Sanjay Bhatnagar, CEO of Enron India Ltd, said.

As per the IDBI-Sidbi and US Exim MoU, the US Exim Bank support through the MoU is expected to be of the order of $500 mn (about Rs 2,250 crore) and covers seven broad areas:

* US goods and services export to India for development of Indian companies
* Information exchange in the areas of future needs and technology transfer
* Financing support to SMEs for imports of US goods and services
* Joint identification of financing opportunities
* Financial structuring support through guarantees and joint financing
* Collaboration between Indian and US companies
* Sharing of repayment risks between parties

The MoU was signed by TM Nagarajan (IDBI executive director), Sailendra Narain (managing director of Sidbi) and W Daley, US commerce secretary.

"IDBI is the seventh largest development bank in the world with an asset base of over Rs 72,000 crore and networth of over Rs 9,000 crore. It has established subsidiaries in commercial banking, asset management and capital market services and has played a major role in institution building by setting up various specialised institutions.

Its subsidiary (Sidbi) is the leading financial institution in the field of promotion, development and financing of SMEs in the country with an asset base and networth of Rs 16,000 crore and Rs 3,000 crore respectively," a Sidbi release issued in Mumbai on Friday said.

"The US Exim Bank is the official US export credit agency, focussing on accelerating exports to developing countries, stimulating small business transactions, promoting the export of environmentally beneficial goods and services and expanding project finance capabilities. The bank has an asset base of over $ 18 bn and it has helped to support more than $ 370 bn of US exports worldwide. During 1999, it authorised $ 13 bn in loans, guarantees and export credit insurance," the release added.

On ther other hand, ICICI will provide Hughes Ispat a debt underwriting facility of about $225 million including a short term funding facility of $87 million and arranging $140 million as equity.

The agreement for funding the basic telecom services project – for catering Maharashtra (including Mumbai) and Goa – was signed on Friday by ICICI deputy managing director SH Bhojani and HIL vice chairman Pradman Kaul. US Secretary of Commerce William Daley was present at the signing ceremony. The deal forms part of a series of agreements on Indo-US economic co-operation reached during the India visit of US President Bill Clinton.

The funds of about $225 million, to be arranged by ICICI, will make up the entire commercial rupee debt requirements of the $750 million project which will provide broad-based telecom connections across Maharashtra and Goa. The remaining debt will come from vendors and other sources.

HIL is planning to raise about $140 million as equity through a combination of private placement and IPO. The company is in talks with various potential investors. ICICI’s investment banking arm ICICI Securities is arranging the equity component of the funding.

HIL – promoted by Hughes Network Systems and Alltel Corporation of the US and domestic Ispat group – already has over 20,000 lines in Mumbai, Navi Mumbai and Pune.

"HIL has aggressive plans to become a broad-based multimedia services provider using latest access and transmission technologies. To fuel these plans, HIL has formed a broad-based relationship with ICICI to have wide experience and deep understanding of the issues and trends in the Indian telecom sector," HIL vice chairman Kaul said.