This clears the way for the company to raise loans from international lending agencies which got stuck when US Exim Bank and OPIC withdrew their guarantees in the wake of the sanctions imposed by the US after the nuclear tests in May this year.

The company is also raising another $150 million from ICICI. The total project cost for the next three years is slated to be around $1.2 billion with a debt-equity ratio of 1:1. The Canadian Imperial Bank is the lead arranger for the foreign component of the loan.

Hughes Ispat Ltd (HIL) had signed the licence agreement with DoT in September, 1997, and plans to offer six lakh lines within the first three years. However, plans went a little awry while the company was planning financial closure with US Exim Bank. The nuclear tests dented plans as thebank withdrew the political risk coverage. The situation worsened with Moody's downgrade of India.

In the first year the company has already paid Rs 397 crore. The total licence fee to be paid by HIL in the next 15 years will Rs 13,909 crore. Sources said that the cumulative licence fee to be realised from all other operators would be Rs 13,847 crore. HIL is the second private basic service provider promoted by the Ispat Group to have commissioned its services in Mumbai on October 30. The area being covered include Navi Mumbai, Pune and probably Worli in the first year of operation, said company sources.HIL was involved in a bitter and long drawn legal battle for the licence with Tata Teleservice for the lucrative belt that includes the vast industrial belt and the financial capital of south Mumbai.