New initiative of NLC Finance Department saves 460 cr


NLC India Limited, a ‘Navratna’ PSU is implementing a coal based power project (3X660) at Ghatampur, Kanpur Dehat, UP through a joint venture company called NUPPL with UPRVUNL at an estimated project cost of RS.17,238crore. The debt component is 70% of the project cost amounting Rs12067 crore.

In order to secure debt component, the company has adopted an innovative method of tendering including reverse auction mechanism (A reverse auction mechanism is an auction approach to procurement/tendering, wherein sellers which meet certain minimum criteria are eligible to submit non-negotiable price bids. The buyer (typically a utility) then selects winning sellers based on the lowest priced bids first, and signs non-negotiable standard contracts with the winning sellers, incorporating the prices bid by that seller), with the help of M/S MSTC in which all major bankers and financial institutions participated and after the successful tendering method followed, a very competitive rate of 9.35% was secured for an amount of Rs.4,200 crore.

Prior to this method, the company resorted to traditional way of tendering and could secure an interest rate of 10.50%.This new method is resulting in a saving to the tune of Rs.460 crore  over the tenor  of the loan .The saving secured is expected to continue in getting the balance loan in due course of time .This may reduce the project cost significantly which will reduce the expected level of tariff.

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