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NALCO- NPCIL’s JV to raise up to Rs 1,500 crore term loan over next 3-months

02 Jan 2013 Evaluate

Nalco Power Company, a JV company formed by National Aluminium Company (NALCO) and Nuclear Power Corporation of India (NPCIL), to set up nuclear plants, will be raising a term loan of up to Rs 1,500 crore over the next three months for funding the construction of power generation capacities. Further towards this development, the company is already in talks with the banks and hopes to complete the process in the next two-three months.

Moreover, the joint venture is also exploring other options such as a bond issue or external commercial borrowings (ECBs) as well, since with the project size of Rs 11,500 crore, the total debt requirement stands at Rs 7,000 crore. However, the companies are yet to decide on the quantum of the bond or ECB issue. Furthermore, with the earnings of the power plants being in Indian rupees, the two will have to set up a hedging mechanism in case of ECB borrowings.

The two companies have formed a JV to set up 2x700 MW capacity totaling to 1,400 MW with a deadline of March 2016. As per the JV agreement, NALCO has 26% stake in the newly formed company, which is proposed to be enhanced to 49% subsequently. Meanwhile, the balance stake is controlled by NPCIL , the sole producer of nuclear power in India.

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