NTPC, Orissa lock horns over Rs 400-crore bonds issue of REL

Bhubaneswar, Feb 25 | Updated: Feb 26 2005, 06:13am hrs
The Rs 400-crore bonds issued by Reliance Energy Ltd (REL), erstwhile BSES Ltd, has become a bone of contention between the the Orissa government and the Central power utility.

With BSES defaulting in payment of interest on the bonds, NTPC has asked the state government to transfer the bond amount as per the tripartite agreement. The state government, however, is unwilling to oblige NTPC for it would weaken the financial position of the state.

BSES Ltd, which is now in the power distribution business of three of the four zones - Southco, Wesco and Nesco - of Orissa, has issued bonds worth Rs 400 crore in favour of Gridco to offset the power bills dues. The bonds, with 12.5% coupon rate redeemable in seven years was issued in October 2000. Gridco, the state owned transmission company then pledged the bonds with NPTC in lieu of dues of the Central power utility.

BSES Ltd has, however, defaulted to the tune of Rs 150 crore towards the interest payment by now. What is concerning NPTC and the state government is that the private utility has to dish out Rs 120 crore towards redemption of the bonds in September, 2005.