REC to securitise Aptransco receivables

Suresh Nair

Mumbai, May 22: THE Rural Electrification Corporation (REC) is understood to be negotiating for securitisation of receivables of Aptransco, the distribution utility in the state of Andhra Pradesh. According to sources, receiveables worth over Rs 250 crore might be securitised. This will be the second tranche of securitisation.

The corporation had earlier successfully securitised receivables worth Rs 206 due from Aptransco. The issue was for Rs 100 crore initially, but eventually sold loans of Rs 191 crore at a premium of Rs 15 crore

The receivables in the earlier deal were valued at Rs 266 crore, which is to accrue in 61 months time. The coupon rate for the deal has been pegged at 11 per cent on an annualised rate. The amount will be payable in equated monthly instalments. The new deal is also expected to be on the same lines.

It was for the first time in the history of the power sector that receivables of a power utility were securitised. The corporation is to explore more such opportunities.

The securitisation of the receivables from Aptransco would reduce REC’s market borrowings and make more funds available for future lending. The securitisation of Aptransco dues will also reduce REC’s direct exposure to the borrower.

The transmission company will also be benefited, as it would reduce the direct exposure and facilitate further financing from REC. The corporation might also raise loans from the Asian Development Bank (ADB) to the extend of $200 to $300 million. This will be used as stand-by to swap dollar raised by the corporation, which will mature by 2002-3. However, sources say that this will be subject to ADB accepting the proposal. The corporation also has other borrowing plans, where in it will raise around Rs 500 crore.

The corporation as a matter of strategy is trying to diversify its borrowings, the need has arisen, as REC has discouraged itself to take budgetary support from the government. The government in the fiscal 2000-01 had discontinued budgetary support of Rs 600 crore to REC.The corporation had also planned a buyback of shares from the government, involving cash out flow of Rs 196 crore. The buyback proposal has not been accepted by the government.