The Hindu Business Line : ECB policy modified to include mining, exploration, refining sectors

New Delhi, Oct. 7 Companies in the mining, exploration and refining sectors are to get a boost in terms of better and larger access to overseas funding, with the Government expanding the definition of “infrastructure” under the external commercial borrowing (ECB) policy to include these three sectors.

With this move, companies in these sectors can avail themselves of borrowings of up to $500 million a year for rupee expenditure under the approval route. The only rider is that borrowings in excess of $100 million should have a minimum average maturity of seven years.

The limit for infrastructure companies was raised to $500 million in the last week of September. Under the current ECB policy, non-infrastructure companies can raise up to $50 million a year for rupee capital expenditure under approval route.

The other benefit for companies in mining, exploration and refining sectors would be in terms of higher all-in-cost ceilings for ECBs with minimum average maturity of seven years. This ceiling has been pegged at 450 basis points over London inter bank offered rate (LIBOR), which is the norm applicable for infrastructure companies.

“On a review, it has been decided that for development of the mining, exploration and refinery sector in the country, the definition of infrastructure for the purpose of ECB may be expanded,” a Finance Ministry release said.

Infrastructure sector will now be defined in the ECB policy as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) sea port and airport, (vi) industrial parks, (vii) urban infrastructure (water supply, sanitation and sewage projects) and (viii) mining, exploration and refining.

All other aspects of ECB policy such as eligible borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged, the release added.