Powergrid has raised a loan of $250 million from ADB which is already effective. The commercial loan has a maturity of 15 years, including a grace period of four years and comes with an attractive indicative spread of 80 basis point for the first seven years and 20 basis points for the balance period over LIBOR.

ADB would also provide partial credit guarantee to the loan from 1 to 7 years. The Government of India (GOI) guarantee would start from the eight year onwards.

This is a maiden attempt to get long-term borrowing for the infrastructure sector from the international commercial market and it is the first time the government of India has agreed to provide credit guarantee. Powergrid is proposing to utilise the loan proceeds for important transmission projects to create a national grid like the Raipur-Rourkela and Kolahapur-Mapusa 400 kV lines.

Contract awards for these lines has already been placed. Other projects likely to be funded include Ramagundam III transmission project costing Rs 390 crore which has been put up for the public investment bureau (PIB) approval. Loan proceeds would also be utilised to part fund the transmission system associated with the Sipat and Tala Generation projects costing Rs 2400 and Rs 2050 crore respectively. These are under the active consideration of the CEA for techno-economic clearance.