ADB approves $300 million loan to NTPC

NEW DELHI — Manila-based Asian Development Bank (ADB) has for the first time agreed to extend up to $300 million loan to state-owned power major NTPC Ltd for its power generation programme without seeking government guarantee.

By (IANS)

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Published: Sat 29 Jul 2006, 11:59 AM

Last updated: Sat 4 Apr 2015, 1:12 PM

The loan was approved on Thursday by ADB’s Board to finance NTPC’s power generation capacity expansion programme and reduce India’s power shortfall, the multilateral body said in a statement.

“The loan will be ADB’s first time lend to a majority state-owned enterprise without a government guarantee under the bank’s Innovation and Efficiency Initiative (IEI) through pilot financing instruments,” the official statement said.

The loan is to be provided in two parts. The first part is a loan of $75 million from ADB’s own resources, and the second a loan through ADB’s Complementary Financing Scheme (CFS) of $225 million to be underwritten and syndicated to commercial lenders.

This will be the first time ADB’s CFS product is being used in India.

The loan will help fund capital expenditure for two projects — the Sipat Super Thermal Power Plant in Bilaspur, Chhattisgarh — and the Kahalgaon Super Thermal Power Plant Stage II Project at Bhagalpur, Bihar. Together these two projects will add 4,480MW of electricity to the national grid between 2006 and 2009.

Although India’s power sector has expanded rapidly in the past few years the country has a large power supply deficit that is constraining economic growth.

The government has set an ambitious target of providing power for all by 2012, which would require raising the generation capacity to 200,000MW by 2012 from the 131,000 MW currently.

Formerly known as National Thermal Power Corporation Limited, NTPC is owned 89.5 per cent by the government, having listed 10.5 per cent of its shares on Indian stock exchanges in 2004.

With a total installed capacity of 24,249 MW at the end of last year, it runs 14 coal-fired and seven gas-fired power stations, and three joint venture projects, accounting for more than a quarter of the country’s power generation.

“As the largest power generator in India, NTPC’s ability to increase power capacity is critical to reducing peak power and energy deficits, which may soon constrain the country’s economic growth targets,” said Don Purka, an ADB structured finance specialist.

“NTPC is a technically and financially sound enterprise with strong cash flows, a model corporate governance reform programme and experienced management.”

For the first time in India, NTPC will implement supercritical steam technology at the Sipat plant that will operate at higher pressures and temperatures, improving efficiency and reducing fuel consumption and greenhouse gas emissions such as carbon dioxide. In addition, the two projects will adhere to air emission and effluent standards.



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