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Power Grid plans to raise up to Rs13,500 crore this fiscal

LiveMint logoLiveMint 13-06-2014 P.R. Sanjai

Mumbai: Power Grid Corp. of India Ltd plans to raise up to `13,500 crore in 2014-15 from the domestic market through secured and unsecured bonds issued to institutional investors.

The private placement of bonds will be issued in up to eight tranches. The proceeds will be used to meet capital expenditure, Power Grid said in a filing to BSE.

The state-run utility has lined up a `1 trillion capital expenditure for the 12th Plan period (2012-17). For Power Grid, 30% of capital expenditure in any Plan period comes from internal accruals and the balance from loans. Of the loan amount, about 40% is borrowed from the domestic market and the rest from international lenders.

The company is exploring bonds with a green shoe option—an over-allotment option in case demand exceeds expectations—by way of “secured, unsecured, non-convertible, non-cumulative, redeemable, taxable and tax-free bonds”.

Power Grid said in the note it would provide any securities or guarantees in connection with any form of debt, including external commercial borrowings, and to provide inter corporate loans on cost-to-cost basis up to `3,000 crore to project special purpose vehicles (SPV) acquired by the company.

The SPVs are Vizag Transmission Ltd, Powergrid NM Transmission Ltd, Unchahar Transmission Ltd and NRS XXXUI (A) Transmission Ltd.

Power Grid wants to secure loans from lenders such as the Asian Development Bank and the World Bank because of the low rate of interest they charge and the long repayment tenure they offer.

ADB loans typically have a 25-year tenure and a five-year moratorium. World Bank loans are for 30 years and come with a four-year moratorium.

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