Raise automatic ECB limit: NTPC to govt

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Mumbai, Aug 19: State-run National Thermal Power Corporation (NTPC) has made a fresh appeal for raising permissible external commercial borrowings (ECB) to finance the rupee as well as foreign currency expenditure.

At present, companies can raise up to $500 million per annum through ECBs under the automatic route for import of capital equipment. However, NTPC argued that this is inadequate as its debt requirement is of the order of Rs 1,05,500 crore with a debt : equity ratio of 70 : 30. The company, which seeks to become a 75,000 mw company by 2017, plans to raise foreign currency debt of Rs 60,300 crore and local currency debt of Rs 45, 200 crore progressively.

NTPC has called upon the power ministry and Central Electricity Authority (CEA) to take up its case with the finance ministry and the Reserve Bank of India (RBI) after it was forced to resort to costlier borrowings, especially to meet its rupee expenditure in a power project.

NTPC argued that projects placed on Bharat Heavy Electricals Ltd (BHEL) are not eligible for financing through ECBs, which offer low cost financing for longer tenures compared to domestic sources. Availability of long-term rupee debt, which runs into a huge number for NTPC's projects, is a cause of concern as the domestic market has limitations of size and liquidity.

NTPC sources told FE, “The company is in the process of floating bulk tenders for 7 units of super-critical sets of 660 mw and 800 mw”.

One of the key assumptions for the capacity expansion plan is free access to external capital markets for raising debt. NTPC has few opportunities for import of capital equipment since most of the awards are bagged by the domestic equipment suppliers even under international competitive bidding.

NTPC asserted that ECBs offer low cost financing for longer tenures compared to domestic sources. The participation of foreign vendors, directly or through collaboration with domestic bidders, will encourage commercial banks to offer buyer's credits guaranteed by the relevant export credit agencies.