TNPDCL floats tender to reduce borrowing costs
The debt burden originally rested with the now bifurcated Tamil Nadu Generation and Distribution Corporation (Tangedco), which had a total debt of Rs 1.8 lakh crore.
CHENNAI: In a bid to reduce its substantial borrowing costs, the Tamil Nadu Power Distribution Corporation Limited (TNPDCL) has floated a global tender seeking advisor-cum-arranger services to refinance its Rs 90,000 crore debt at significantly lower interest rates.
Currently, TNPDCL incurs a monthly interest outgo of over Rs 900 crore. To address this financial burden, the utility issued a global Expression of Interest (EOI) on June 24, inviting qualified financial institutions to act as advisors-cum-arrangers for the refinancing exercise.
The selected advisor will be responsible for identifying suitable lenders, structuring loan terms, preparing credit profiles, obtaining necessary approvals from the Reserve Bank of India (RBI) and other regulatory bodies, and supporting the disbursement process. The initial engagement period is 12 months, extendable by another year.
The debt burden originally rested with the now bifurcated Tamil Nadu Generation and Distribution Corporation (Tangedco), which had a total debt of Rs 1.8 lakh crore. Tangedco paid an annual interest of about Rs 20,000 crore at an average interest rate of 10.2%, largely to central funding agencies such as the Power Finance Corporation (PFC) and REC.
Following the bifurcation, TNPDCL, now functioning as the distribution arm, has inherited a debt of Rs 90,000 crore, translating to a monthly interest payment of Rs 900 crore, a senior official said.
"Our objective is to reduce the cost of borrowing, " the official explained.
The official also indicated that Tamil Nadu Power Generation Corporation Ltd (TNPGCL) may consider engaging the same advisor for its refinancing plans.