The Hindu Business Line : Damodar Valley Corp may raise Rs 250-crore loan with KfW’s help

Kolkata, Aug. 21 Damodar Valley Corporation is negotiating with KfW Bankengruppe (KfW Banking Group) of Germany for raising a €45 million (approximately Rs 250 crore) loan to finance its mega expansion project. DVC is implementing a 5800 mw capacity expansion plan worth over Rs 24,000 crore.

While bulk of the finance would be raised from domestic sources, including funds available from Power Finance Corporation and Rural Electrification Corporation, the favourable foreign exchange rate scenario has offered DVC with an opportunity to diversify its loan portfolio.

Recently, the RBI allowed the corporation to raise $500 million ECBs annually under automatic route. Accordingly sanctions were secured from three Indian public sector banks, including the State Bank of India for a total foreign currency loan of approximately $400 million (Rs 1,636 crore).

In the process

When contacted, a DVC official confirmed that they were “in discussion with KfW on raising ECBs”. On sanctions from PSU banks, he said, “We are now evaluating the sanctions and would take a call on implementation of the same shortly.”

According to sources, the cost of foreign currency loans works out in the region of 7.5 per cent compared to the most competitive domestic borrowings available at 9-9.5 per cent.

Meanwhile, DVC is planning financial closure of its proposed thermal power stations in Koderma (Jharkhand) and Durgapur (West Bengal) of 1000 mw each within a month.

“We have already received necessary approvals from the Union Government for raising Rs 2,900 crore loan finance for Koderma power station and the agreement is expected to be through latest by the first week of September,” the official said.

“Sanctions are received from REC for Durgapur project. We are expecting a financial closure of the project in September,” he added.

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