India's state-run PowerGrid Corp aims to borrow between $150 million to $200 million in the external market to fund an ambitious expansion plan, a senior company official said on Thursday.

PowerGrid, which has a monopoly on power transmission, has invited offers for a first tranche of $50 million, Ramesh Bahri, PowerGrid's deputy general manager for corporate planning, told Reuters. "This is the first time we are entering the market. Bids (for syndication) were invited on the 30th of July," Bahri said on telephone. "We expect to raise $150 million to $200 million in tranches. The first tranche is for $50 million."

"It is for the bankers to assess PowerGrid, but we expect the (interest) rate to be around 50 to 60 basis points over LIBOR." he said, referring to the London Interbank Offered Rate.

India's Disinvestment Commission said in a report on Wednesday that it did not want any sale of state stakes in PowerGrid for the time being as it was not ready for the market.

The commission said PowerGrid had a high level of efficiency comparable with international transmission companies, but faced problems in realising its dues from state electricity boards (SEBs), which are in poor financial condition.

Strengthening India's transmission infrastructure needs an investment of Rs 56000 crore ($15.7 billion), the panel said. "PowerGrid would need to raise such resources from the market either through debt instruments or through equity issue," it said. The government said last June that international financial institutions had committed Rs 6000 crore ($1.68 billion) to finance new PowerGrid projects, in addition to an equal amount already committed for ongoing projects.

The World Bank had agreed in principle to extend $1.2 bilion against a basket of projects spread over five to seven years, in addition to existing commitments worth $1.5 billion, it said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.