The RBI today gave Reliance Power permission to raise money from the US Exim bank and well as Chinese banks for projects in India. Chief executive officer, JP Chalsani tells CNBC-TV18 that they are planning to raise USD 2.2 billion......
The RBI today gave Reliance Power permission to raise money from the US Exim bank and well as Chinese banks for projects in India. Chief executive officer, JP Chalsani tells CNBC-TV18 that they are planning to raise USD 2.2 billion which will be used for their Sasan Power project.
“This financing will be on a project finance basis, and will support the cost of importing equipments as well as some local cost”, said Chalsani in an exclusive interview. “USD 900 million will come from US Exim and about USD 1.1 billion will come from Chinese banks,” he adds.
Excerpts from Markets Midday on CNBC-TV18 Watch the full show »
By opting for external commercial borrowings, RPower is substantially reducing its cost of funding.
Below is an edited transcript of his interview with Latha Venkatesh and Ekta Batra. Also watch the accompanying video.
Q: What is the amount that you are planning to raise from these banks and what would the cost be?
A: This is USD 2.2 billion which is over Rs 10,000 crore is what we have planned to raise is for Sasan Power project. This will basically replace the domestic loans which we already raised earlier. Out of this amount, over USD 900 million will come from US Exim and about USD 1.1 billion will come from Chinese banks. All this financing is on project finance basis, and it will support the cost of importing equipments as well as some local cost.
Q: With RNRL getting merged into RPower, you have some FCCB’s that will mature. Can you use this money for that purpose?
A: No, this is project request financing for Sasan Power Limited for the specific purpose of Sasan project. As you are aware, we closed the Sasan Project financially with Idnian banks earlier this year and this will be replaced by an external commercial borrowing of USD 2.2 billion coming from US Exim and Chinese banks. This will substantially reduce the cost of funding.
Q: What is the cost of the new forex loans and how much are you saving in terms of percentage points in the cost of money?
A: US Exim has a fixed interest rate for the entire period of the loan which is expected to be around 3.5%. The interest on the loans from the Chinese banks is expected to be London Interbank Offer Rate (LIBOR) plus around 300 basis points. With high Indian interest rates and a debt of over Rs 10,000 crore, savings will definitely be significant for long tenure loans.
Q: How long is the US loan in terms of tenure?
A: The door to door is 17 years.
Q: How much is the total amount that you have signed in terms of a MoU with the US Exim and Chinese Banks?
A: The memorandum of understanding (MoU) with US Exim is signed for USD 5 billion. Out of this, over USD 9 million is for Sasan for which we have got the approval. US Exim has also sanctioned over USD 600 million for Samalkot Project which will come separately. Another USD 85 million is sanctioned for solar. Till now, they have signed about USD 1.6 billion out of USD 5 billion. So it’s on a project to project basis as we move forward; they will be sanctioning more and more.
As far as the Chinese Banks are concerned, we signed a MoU for USD 12 billion to support our imports from China for various projects. Out of that, the first project is Sasan for which they have already sanctioned USD 1.1 billion and subsequent projects will follow. All this is on project finance basis at the special purpose vehicle (SPV) level.
Q: So this LIBOR plus 300 basis is what for Chinese loans?
A: Yes, for Chinese loans.
Q: What is the tenure for that and what is the cost to company?
A: For US Exim it’s a completely fixed interest rate and we know what the interest rates are for India this being loan term loans. For Sasan itself we are talking about close to Rs 11,000 crore, that is USD 2.2 billion, so you can imagine the interest cost savings.
Q: RNRL’s USD 300 million FCCB matures in MArch. Is that still outstanding and have you made arrangements to pay that back? I think that falls due in March.
A: That’s completely an independent issue which is being handled independently. I think we will talk some other time on this and there this has tied up everything and we expect to draw down these funds sometime in October for this Sasan project.
Q: Can you update us with regards to the capacity which is coming on stream?
A: See Sasan is the project for which funding is happening. That project has both power project and miner in track. The first unit of Sasan is a 660 megawatt unit which will come in December 2012, which is slightly ahead of the power ourchase agreement (PPA) schedule. Thereafter, the balance 5 units will come in three months interval.
And as far as the coal mining for Sasan is concerned, the coal mine development is already under progress. Coal is expected to be produced in the later part of next year, ahead of the power plant commissioning. So coal will start production in the lets say 3rd quarter of next year.
And this is of course the 3rd project in the series. We already have two projects on track and the gas based project of Samalkot is in schedule.
Q: Are you all negotiating at all for a change in the PPA and the price at which the power will be sold to the SEB’s?
A: Sasan is a capital coal waste project. Therefore we have full control on the quality, quantity and the pricing of fuel. So therefore the issue of renovation doesn’t arise at all.
The RBI today gave Reliance Power permission to raise money from the US Exim bank and well as Chinese banks for projects in India. Chief executive officer, JP Chalsani tells CNBC-TV18 that they are planning to raise USD 2.2 billion which will be used for their Sasan Power project.
“This financing will be on a project finance basis, and will support the cost of importing equipments as well as some local cost”, said Chalsani in an exclusive interview. “USD 900 million will come from US Exim and about USD 1.1 billion will come from Chinese banks,” he adds.
Excerpts from Markets Midday on CNBC-TV18 Watch the full show »
By opting for external commercial borrowings, RPower is substantially reducing its cost of funding.
Below is an edited transcript of his interview with Latha Venkatesh and Ekta Batra. Also watch the accompanying video.
Q: What is the amount that you are planning to raise from these banks and what would the cost be?
A: This is USD 2.2 billion which is over Rs 10,000 crore is what we have planned to raise is for Sasan Power project. This will basically replace the domestic loans which we already raised earlier. Out of this amount, over USD 900 million will come from US Exim and about USD 1.1 billion will come from Chinese banks. All this financing is on project finance basis, and it will support the cost of importing equipments as well as some local cost.
Q: With RNRL getting merged into RPower, you have some FCCB’s that will mature. Can you use this money for that purpose?
A: No, this is project request financing for Sasan Power Limited for the specific purpose of Sasan project. As you are aware, we closed the Sasan Project financially with Idnian banks earlier this year and this will be replaced by an external commercial borrowing of USD 2.2 billion coming from US Exim and Chinese banks. This will substantially reduce the cost of funding.
Q: What is the cost of the new forex loans and how much are you saving in terms of percentage points in the cost of money?
A: US Exim has a fixed interest rate for the entire period of the loan which is expected to be around 3.5%. The interest on the loans from the Chinese banks is expected to be London Interbank Offer Rate (LIBOR) plus around 300 basis points. With high Indian interest rates and a debt of over Rs 10,000 crore, savings will definitely be significant for long tenure loans.
Q: How long is the US loan in terms of tenure?
A: The door to door is 17 years.
Q: How much is the total amount that you have signed in terms of a MoU with the US Exim and Chinese Banks?
A: The memorandum of understanding (MoU) with US Exim is signed for USD 5 billion. Out of this, over USD 9 million is for Sasan for which we have got the approval. US Exim has also sanctioned over USD 600 million for Samalkot Project which will come separately. Another USD 85 million is sanctioned for solar. Till now, they have signed about USD 1.6 billion out of USD 5 billion. So it’s on a project to project basis as we move forward; they will be sanctioning more and more.
As far as the Chinese Banks are concerned, we signed a MoU for USD 12 billion to support our imports from China for various projects. Out of that, the first project is Sasan for which they have already sanctioned USD 1.1 billion and subsequent projects will follow. All this is on project finance basis at the special purpose vehicle (SPV) level.
Q: So this LIBOR plus 300 basis is what for Chinese loans?
A: Yes, for Chinese loans.
Q: What is the tenure for that and what is the cost to company?
A: For US Exim it’s a completely fixed interest rate and we know what the interest rates are for India this being loan term loans. For Sasan itself we are talking about close to Rs 11,000 crore, that is USD 2.2 billion, so you can imagine the interest cost savings.
Q: RNRL’s USD 300 million FCCB matures in MArch. Is that still outstanding and have you made arrangements to pay that back? I think that falls due in March.
A: That’s completely an independent issue which is being handled independently. I think we will talk some other time on this and there this has tied up everything and we expect to draw down these funds sometime in October for this Sasan project.
Q: Can you update us with regards to the capacity which is coming on stream?
A: See Sasan is the project for which funding is happening. That project has both power project and miner in track. The first unit of Sasan is a 660 megawatt unit which will come in December 2012, which is slightly ahead of the power ourchase agreement (PPA) schedule. Thereafter, the balance 5 units will come in three months interval.
And as far as the coal mining for Sasan is concerned, the coal mine development is already under progress. Coal is expected to be produced in the later part of next year, ahead of the power plant commissioning. So coal will start production in the lets say 3rd quarter of next year.
And this is of course the 3rd project in the series. We already have two projects on track and the gas based project of Samalkot is in schedule.
Q: Are you all negotiating at all for a change in the PPA and the price at which the power will be sold to the SEB’s?
A: Sasan is a capital coal waste project. Therefore we have full control on the quality, quantity and the pricing of fuel. So therefore the issue of renovation doesn’t arise at all.
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