Scarcity of funds in the overseas market is forcing Indian power companies, both in the public and private sectors, to look at raising funds from the domestic market itself.
Whether it is a private biggie like Reliance Power Ltd — which has clearances in place to raise up to $4 billion through the ECB route — or public sector giant like NTPC, companies are seen re-working their overseas funding strategies by tying up the debt for their large projects from the domestic markets.
NTPC — which raised around 40 per cent of its debt requirement from the overseas market and is sitting on a huge cash surplus — said inflow of foreign funds is now restricted to borrowings from multilateral agencies like the Asian Development Bank, Japan Bank for International Cooperation (JBIC) and others.
Speaking to Hindustan Times, the chairman and managing director of NTPC, RS Sharma, said that NTPC used to raise anywhere up to 35 per cent of its debt requirement from abroad. But the availability of foreign funds at around 12 per cent interest rate including the forex rate fluctuation has made the power corporation to arrange funds from the domestic market and it is available at around 9.5 per cent.
Out of its capex requirement of Rs 17,000 crore for 2009-10, NTPC plans to raise Rs 11,000-12,000 crore as debt.
Out of this, around Rs 5,50 crore has been tied up including Rs 1,400 crore loans from multilateral agencies and Rs 3,000 crore from Power Finance Corporation (PFC).
“We are in talks with State Bank of India to tie up around Rs 8,300 crore,” Sharma said.
Similarly Reliance Power, which has plans to raise $4 billion for its Sasan and Krishnapatnam ultra mega power projects, has now decided to tie up the debt for these projects from the domestic markets.
The company is in talks with domestic banks and financial institutions for sourcing debt for its ultra mega power projects, each of which is expected to cost close to Rs 16,000 crore.