The state government has approved an inter-corporate loan proposal under which the cash-rich miner Odisha Mining Corporation (OMC) has been asked to provide Rs 500 crore loan to Grid Corporation of Odisha Ltd (Gridco), the government's power trading company.
In the high level official meeting headed by Chief Secretary, B K Patnaik, it was decided that the rate of interest should be fixed at 10 per cent per annum. However, as it is widely expected that interest rates are likely to come down in next couple of quarters, it was also decided that the rates would be floating in nature.
The rate of interest on the Rs 500 crore inter corporate loan has been pegged at short term (between one to two year) deposit rate of State Bank of India, plus 1.5 per cent.
The loan approval comes as a fresh doze of oxygen for Gridco, which is yet to complete the formalities to float a bond to raise Rs 1,000 crore from open market after banks showed it exit door.
The company is also in the final stage of clinching a deal with Power Finance Corporation (PFC) to avail Rs 500 crore loan.
In October, Gridco had given a proposal to raise Rs 500 crore loan from any profit-making PSU for a period of six years with one year moratorium period, at nine per cent per year interest rate.OMC is the richest PSU of Odisha government, sitting with a cash surplus of over Rs 5,000 crore, most of which come by selling iron ore and chrome ore to steel makers.
Gridco was in urgent need of Rs 500 crore to pay off dues to Vedanta Group, which has demanded Rs 744 crore from the state-run power trader for supplying power from its independent and captive power unit. Last week, in a letter addressed to the state energy department, it had threatened to cut power supplies over non-payment of dues in time.
Gridco Ltd, which contested the Rs 744 crore figure, said as per its calculation, Vedanta Group would be paid about only Rs 300 crore.
Besides Vedanta dues, for 2012-13, Gridco is expecting Rs 800 crore gap between its revenue and income and is desperate to arrange money for its internal expenses and payment to power generators after it received negative reply from banks.
Senior officials of Gridco are already in discussion with several rating agencies such as SME Rating Agency (SMERA) and Fitch since June this year, to fetch best possible rating for the bond, which may be issued for a period of seven year.