SBI to lend Rs 2,500 cr to Neyveli Lignite Corpn

State Bank of India has agreed to lend Rs 2,500 crore to Neyveli Lignite Corporation Ltd to part-fund its 2 x 500-MW Neyveli New Thermal Power Station project. The first unit is expected to be commissioned in June 2015 and the second in December 2015.

The project was sanctioned at an estimated cost of Rs 5,907 crore and would have a debt-equity ratio of 70:30. It would replace the existing 600-MW TPS-1 power plant that has been in existence for about 50 years.

Fuel would come from the mines operated by the company and the power generated would meet the needs of the South. NLC has signed Power Purchase Agreements (PPAs) with TANGEDCO of Tamil Nadu and the distribution companies of other states.

While the equity part of the expenditure would be met through internal accruals, the loan component would be funded through rupee term loan, external commercial borrowings, bonds and other debt instruments.

An agreement for the rupee loan was signed in the presence of Mr Pratip Chaudhuri, Chairman, SBI, and Mr A.R. Ansari, CMD, NLC. It was signed by Mr K. Sekar, Director (Finance), NLC, and Mr S.B. Nayar, Deputy Managing Director & Group Executive (Corporate Banking), SBI.

NLC has at present operates three mines at Neyveli and one at Barsingsar in Rajasthan with a total capacity of 30.6 million tonnes of lignite and three power stations with a total installed capacity of 2,740 MW.