The state-owned power sector utilities are on a debt-raising spree to sustain capacity augmentation.

The National Thermal Power Corporation, the National Hydroelectric Power Corporation and Powergrid Corporation of India Ltd plan to leverage insurance money in a big way for the purpose and are in the process of raising over Rs 10,000 crore (Rs 100 billion) from the Life Insurance Corporation.

While NTPC has approached financial institutions and insurance companies to raise Rs 7,000 crore (Rs 70 billion) debt in the form of Rs 4,000 crore (Rs 40 billion) term loans and to issue bonds of Rs 3,000 crore (Rs 30 billion), NHPC has tied up long duration loans of Rs 2,500 crore (Rs 25 billion) from LIC.

PGCIL is raising Rs 900 crore (Rs 9 billion) to finance its expansion plans, institutional sources said.

NTPC proposal envisages a payment period of over 30 years and has proposed interest rate on term loans at 100 basis points over the government security yield. For the bonds, the coupon rate proposed will be 90 basis points over the G-sec yield.

NHPC, which has been entrusted with the task of adding 4357 MW of hydroelectric generation capacity during the Tenth plan at an approved investment of Rs 32,226 crore (Rs 322.26 billion) is also borrowing  around Rs 2,500 crore from LIC, at an average interest rate of 9.25 per cent, for its projects coming up in Himachal Pradesh and Uttaranchal, the sources said.

NTPC's internal external borrowing resources (IEBR) for the current fiscal has been pegged at Rs 4,496 crore (Rs 44.96 billion).

In order to sustain its 40,000 mega watt capacity addition target till 2012, NTPC has planned leveraging significant debt from the markets besides its proposed public float of Rs 400 crore (Rs 4 billion) planned for November this year.

NTPC had raised Rs 1,500 crore (Rs 15 billion) from LIC last fiscal through private placement of bonds for undertaking prepayment of costly Government of India loans.

Powergrid has to raise around Rs 14,000 crore (Rs 140 billion) during the next two plan periods for the systemic integration of the five regional grids being undertaken under the Rs 60,000-crore (Rs 600 billion) National Grid project. It is also in talks with multilateral institutions like the Asian Development Bank and the World Bank for raising money.

Looking for more, NTPC, NHPC and Powergrid plan to raise over Rs 10,000 crore (Rs 100 billion) from LIC. NTPC has approached financial institutions and insurance firms to raise Rs 7,000 crore (Rs 70 billion) debt. NHPC has tied up long-term loans of Rs 2,500 crore (Rs 25 billion) from LIC.

Powergrid is raising Rs 900 crore (Rs 9 billion) to finance its expansion plans. NTPC's internal external borrowing resources has been pegged at Rs 4,496 crore (Rs 44.96 billion) for 2003-04.