Neepco director (finance) M. R. Ghosh (right) with SBI Capital Markets managing director and CEO Indrajit Gupta in Calcutta on Wednesday. Picture by Kishor Roy Chowdhury

Calcutta, March 18: North Eastern Electric Power Corporation Limited (Neepco) will raise Rs 2,500 crore from the market to part-finance two projects in the Northeast.

On Wednesday, the company signed an agreement with a consortium of 13 banks for a structured term loan aggregating Rs 800 crore.

“We will go to the market to raise Rs 2,500 crore to part-finance the Rs 2500-crore Kameng hydro-electric project (600 MW) in Arunachal Pradesh and the Rs 780-crore Tripura gas turbine project (280 mw),” director (finance) M. R. Ghosh said.

Ghosh said it would take another six months for the company to enter the market. However, it would not be a public issue, he added.

“Around 30 per cent of the project cost will be in the form of equity and the rest will be in debt. The modalities for raising the equity is being worked out. We have already approached the Rural Electrification Corporation for a 15-year loan with a coupon rate of 6.5 per cent,” Ghosh said.

Neepco is waiting for a go-ahead from the cabinet for the project. The approval is expected to come through within the next two months.

The company is also awaiting the cabinet’s approval for the 1500-mw Tipaimuk hydro-electric project located on the Arunachal Pradesh-Nagaland-Manipur border.

“This will be Asia’s largest hydel power project built at an estimated cost of Rs 51,00 crore,” he said.

Neepco is currently generating 1130 mw of power, which is about 50 per cent of the total installed capacity of power in the Northeast.

The term loan of Rs 800 crore, which has been syndicated by 13 banks and structured uniquely by SBI Capital Markets, has been arranged at an average interest rate of 6.33 per cent and the proceeds will be utilised to retire high-cost debts.

Neepco has been paying a 14 per cent interest on loans from the central government, Hudco and LIC and the fresh loan will bring down its interest outgo by about Rs 30 crore annually.

“We are planning to retire about Rs 330 crore of the Rs 900-crore loan from the government, Rs 360 crore from Hudco, and Rs 112 crore from LIC,” he said.

Backed by these restructuring measures, Neepco hopes to post a net profit of Rs 200 crore this fiscal compared with Rs 144 crore in 2002-03.

The banks that have agreed to forward the Rs 800-crore loan are Bank of Baroda, Canara Bank, Indian Bank, Oriental Bank of Commerce, Punjab National Bank, South Indian Bank, State Bank of Hyderabad, State Bank of India, State Bank of Mysore, State Bank of Patiala, Uco Bank, Union Bank and United Bank of India.