Official sources said the proposal, which is being given finishing touches, will be submitted to the power ministry in a couple of days. NHPC says it will face no problems in arranging Rs 7,700 crore for buying out NTPC's share capital. NHPC chairman and managing director Yogendra Prasad was not available for comments.

In its ambitious proposal, NHPC has pointed out that it can raise Rs 3,500 crore through securitisation of debtors with the support of the Government. The balance will be raised from the market at competitive rates.

The proposal says that NHPC is confident of raising Rs 4,200 crore from FIs and banks against the share capital of NHPC and NTPC, and will pay the Government the amount partly within this fiscal and the next financial year.

The loan will be raised for 7 to 10 years with an averagematurity period between three-and-a-half to five years at an interest rate of 12.5 per cent to 13.5 per cent per annum with interest tax.

"The loan will be repaid by way of equated monthly/quarterly/yearly instalments and the approximate yearly instalment will range between Rs 750 crore and Rs 900 crore, depending upon the maturity period and interest rate finalised. The balance can be utilised by NHPC for further development of hydro projects and the balance out of NTPC's profits can be used by NTPC for development of thermal projects," the proposal says.

NHPC has also strongly opposed its takeover by NTPC. It has refuted the ministry's statement that NTPC has Rs 12,000 crore available as reserves and has stated that this amount of NTPC is lying only with he SEBs as arrears.

"Had NTPC been running in fund surpluses, it would not have taken huge amount of loans recently from SBI and IDBI. Even for the payment of the first instalment of Rs 2,500 crore towards buying the Hovernment's equity of Rs 4,500crore in NHPC, NTPC will be paying this sum out of the loans raised from the market", a senior NHPC official said. As per NHPC's proposal, the funds are being made available to NTPC by way of securitisation of their debtors through Government guarantee.

Out of the funds so arranged, amounting close to Rs 5,000 crore, NTPC will pay the Centre about Rs 4,200 crore towards the purchase consideration of NHPC's shares and will keep the balance for its use.