PGCIL to seek $2 billion ADB, WB loans

PGCIL will a US$1 billion loan each from ADB and the World Bank.

This is the first time the Power Grid Corporation of India Limited is seeking a loan from an international lender such as Asian Development Bank without a guarantee from the government, according to livemint.com.

“We have been advised by the government to seek non-sovereign loans on the strength of our balance sheet...we are in talks with ADB for availing some part of the loan without sovereign guarantee,” said PGCIL chairman and managing director S.K. Chaturvedi.

Of the $1 billion sought from ADB, around $250 million is expected to be availed as a non-sovereign loan.
PGCIL wants to secure loans from lenders such as the ADB and the World Bank because of the low rate of interest they charge and the long repayment tenure they offer.

“While we are waiting for the exact terms such as the repayment period, interest rates for the ADB loan, things are at a very premature stage for the World Bank loan,” said J. Sridharan, director of finance at PGCIL.

PGCIL operates around 74,000 circuit km of transmission lines and 124 sub-stations. India has an inter-regional power transfer capacity of 20,800MW and PGCIL plans to increase it to 37,000MW by 2012. This will require strengthening regional grids and building more inter-regional links.