Final Report Submit 4 Mdu & CLG

INTERNATIONAL FINANCING ON POWER PROJECTS
SUMMER TRAINING REPORT On International Financing On Power Projects at
For the period 13 June, 2011 to 05 August, 2011 Under the guidance of Shri K. Sreekant Additional General Manager (IF) Submitted By Sandeep Anand 2nd Year Student of MBA in Power Management Roll no. 79 Batch 9th (2010-2012)
Sector-33, Faridabad-121003, Haryana

Affiliated to
Maharishi Dayanand University, Rohtak

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INTERNATIONAL FINANCING ON POWER PROJECTS DECLARATION

I, Sandeep Anand, (Roll No. 79), MBA - Power Management (2010-2012 Batch), of National
Power Training Institute, Faridabad, hereby declare that the summer training report Entitled INTERNATIONAL FINANCING ON POWER PROJECTS
Is an original work and the same has not been submitted to any other institute for the award of
Any other degree.
A seminar presentation of the Training report was made on_________________ and the
Suggestions as approved by the faculty were duly incorporated.
K.P.S.Parmar Presentation in- charge NPTI, Faridabad M.B.A (9th Batch), NPTI
Counter signed:(Director/ Principle of the institution)
INTERNATIONAL FINANCING ON POWER PROJECTS CERTIFICATE

This is to certify that the summer project work of Sandeep Anand titled INTERNATIONAL FINANCING ON POWER PROJECTS is an original work and that this work has not been assigned to anybody in any form. The project work was carried from 13-June-2011 till 05August-2011 at NTPC Ltd., Corporate Centre, Scope Complex, Core7 Institutional area, Lodi Road, New Delhi-110003.
Date: August- 05- 2011
Shri K. Sreekant Additional General Manager (IF) NTPC Ltd.
INTERNATIONAL FINANCING ON POWER PROJECTS ACKNOWLEDGEMENT

I am having great pleasure to present this report entitled INTERNATIONAL FINANCING ON POWER PROJECTS. I take this opportunity to express my sincere thanks to all who contributed to make this a success. First of all I would like to take the opportunity to thanks Shri K. Sreekant, Additional General Manager, NTPC LTD. for giving me the opportunity to undergo my summer internship at NTPC LTD., Scope Complex, Core7 Institutional area, Lodi Road, New Delhi-110003. I would like to express my sincere thanks to my guide Mr. Sunil Kumar Goyel for
providing me the necessary resources for carrying out the study and for his timely and continued support and more importantly his guidance without which this report would have been incomplete. I wish to thank, Ms. Farida Khan, Mr. K.P.S Parmar (Project guide), Mr. Amit Kumar Mishra, Mrs. Indu Maheshwari (Dy. Director), Mr. Rohit Verma (Dy.Director), CAMPS, NPTI (National Power Training Institute) for their valuable inputs. I wish to make a special mention of Mrs. Manju Mam (Dy. Director), Mr. S.K. Chaudhary (Director), CAMPS, NPTI and Mr. J.S.S. Rao (Principal Director), CAMPS, NPTI for providing me an opportunity to do my summer internship at NTPC Ltd. which was a great learning for me. I am greatful to my friends who gave me the moral support in my times of difficulties. Last but not the least I would like to express my special thanks to my family for their continuous motivation and support.
Sandeep Anand
INTERNATIONAL FINANCING ON POWER PROJECTS ABBREVIATIONS

ADBECAAFBDEIBEBRDJBIFERMOCFNCFIBRDIMFTASFJSFDMCFIASMIGAFILSILSIMAPLAsian Development Bank Economic Credit Agency African Development Fund European Investment Bank European Bank for Reconstruction & Development Japan Bank of International Corporation Foreign Exchange Risk Management Operating Cash Flow Free Cash Flow International Bank for Reconstruction & Development International Monetary Fund Technical Assistance Development Fund Japan Special Fund Developing Member Countries Foreign Investment Advisory Service Multilateral Investment Guarantee Agency Foreign Investment Loan Special Investment Loan Sector Investment & Maintenance Loan Adaptable Program Loan
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LILFILERLSALSALPSALSSALRLDRLIMFWBFEMAFERVWACCNPVIRRUNCITRALOPICLearning & Innovation Loan Foreign Investment Loan Emergency Recovery Loan Structural Adjustment Loan Sector Adjustment Loan Programmatic Structural Adjustment Loan Special Structural Adjustment Loan Rehabilitation Loan Debt Reduction Loan Internationally Monetary Fund World Bank Foreign Exchange Management Act Foreign Exchange Rate Variation Weighted Average Cost of Capital Net Present Value Interest Rate of Return United Nations Commission on International Trade Law Overseas Private Investment Corporation
INTERNATIONAL FINANCING ON POWER PROJECTS Table of Contents

1. 2. EXECUTIVE SUMMARY................................................................................................................. 10 ORGANIZATION PROFILE ............................................................................................................. 11 2.1 Vision ................................................................................................................................................ 11 Mission: - ................................................................................................................................................ 11 Core Value: - ........................................................................................................................................... 11 2.2Diversified Growth: - ......................................................................................................................... 11 2.3 Future Capacity Additions: - ............................................................................................................. 13 2.4 Subsidiaries: - .................................................................................................................................... 14 2.5Business Development: -.................................................................................................................... 15 2.6Balance Sheet: -.................................................................................................................................. 16 2.7 SWOT analysis of NTPC .................................................................................................................. 17 3. 4. 5. 6. 7. 8. 9. 10. 11. OBJECTIVE OF THE PROJECT....................................................................................................... 19 SIGNIFICANCE OF THE PROJECT ................................................................................................ 20 SCOPE OF THE PROJECT ............................................................................................................... 20 RESEARCH METHODOLOGY OF THE PROJECT ....................................................................... 21 INTRODUCTION .............................................................................................................................. 22 KEY TERM OF INTERNATIONAL FINANCE............................................................................... 27 DIFFERENCE BETWEEN DOMESTIC FINANCE & INTERNATIONAL FINANCE ............. 33 ROLE OF WORLD BANK, ADB, IFC ......................................................................................... 34 TYPES OF LOAN ...................................................................................................................... 40
11.1 Investment loans ......................................................................................................................... 40 11.2Adjustment loans: - Adjustment loan........................................................................................... 40 11.3Specific Investment Loan............................................................................................................. 40 11.4Sector Investment and Maintenance Loan ................................................................................... 40 11.5Adaptable Program Loan ............................................................................................................. 41 11.6Learning and Innovation Loan ..................................................................................................... 41 11.7Technical Assistance Loan........................................................................................................... 42 11.8Financial Intermediary Loan ........................................................................................................ 42 11.9Emergency Recovery Loan .......................................................................................................... 42 11.10Structural Adjustment Loan ....................................................................................................... 43 11.11Sector Adjustment Loan............................................................................................................. 43 7

11.12Programmatic Structural Adjustment Loan ............................................................................... 43 11.13Special Structural Adjustment Loan .......................................................................................... 44 11.14Rehabilitation Loan .................................................................................................................... 44 11.15Debt Reduction Loan ................................................................................................................. 44 12. LOAN AGREEMENT .................................................................................................................... 45 12.1.1 ARTICLE I DEFINITIONS ..................................................................................................... 45 12.1.2 ARTICLE II LOAN ACCOUNT - COMMITMENT CHARGE - SPECIAL COMMITMENT CHARGE AND REPAYMENT ......................................................................................................... 47 12.1.3 ARTICLE III CURRENCY PROVISIONS............................................................................. 50 12.1.4 ARTICLE IV DISBURSEMENT OF THE LOAN ................................................................. 53 12.1.5 ARTICLE V CANCELLATION AND SUSPENSION .......................................................... 55 12.1.6 ARTICLE VI ACCELERATION TO MATURITY ................................................................ 60 12.1.7 ARTICLE VII TAXES ............................................................................................................ 61 12.1.8 ARTICLE VIII PROJECT IMPLEMENTATION - COOPERATION AND INFORMATIONFINANCIAL AND OTHER INFORMATION - NEGATIVE PLEDGE (PARI PASSU) ................ 61 12.1.9 ARTICLE IX - SETTLEMENT OF DISPUTES - APPLICABLE LAW ............................... 64 13. 14. WHY NTPC IS SUPERIOR THAN OTHERS?............................................................................. 66 REGULATORY FRAMEWORK FOR INTERNATIONAL FINANCE ...................................... 70 14.1 EXTERNAL COMMERCIAL BORROWINGS (ECB) ............................................................ 70 15. RISKS FOR THE INVESTORS ..................................................................................................... 78 15.1 Risk mitigation ............................................................................................................................ 78 15.2 Construction risk: - ...................................................................................................................... 78 15.3 Operating risk: - .......................................................................................................................... 78 15.4 Market risk: -............................................................................................................................... 79 15.5 Interest rate risk: - ....................................................................................................................... 79 15.6 Foreign exchange risk: - .............................................................................................................. 80 15.7 Payment risk: - ............................................................................................................................ 80 15.8 Regulatory risk: -......................................................................................................................... 80 15.9 Political risk: - ............................................................................................................................. 81 15.10 Arrangements for risk mitigation .............................................................................................. 81 16. 17. DATA ANALYSIS OF THE PROJECT ........................................................................................ 82 CONCLUSION ............................................................................................................................... 97 8

18. 19. RECOMMENDATION & SUGGESTION .................................................................................... 97 BIBILIOGRAPHY ......................................................................................................................... 98
LIST OF TABLE
Table 6.1:International Financiers of Coal fired plants ............................................................................... 22 Table 6.2: - Capacity Addition Breakup (XIth) power plant ........................................................................ 23 Table 6.3: Financial Closure Scenario For Private Capacity as per 11th plan ............................................. 25 Table 6.4: Investment ................................................................................................................................. 25 Table 15.1: Opening Loan balance sheet of all banks ................................................................................ 82 Table 15.2: Loan wise Allocation of Interest (Net Charge) as on 04/07/2011 ............................................ 83 Table 15.3: Weighted average of KFW Bank ............................................................................................... 87 Table 15.4: Guarantee fee payable on IBRD For the period 01/04/2011 to 04/07/2011 .......................... 89 Table 15.5: Guarantee fee of World Bank allocated on different projects ................................................ 89 Table 15.6: Foreign Exchange Rate Variation (FERV) of KFW Bank on different projects .......................... 90 Table 15.7: Interest allocation of KFW Bank on different projects............................................................. 91 Table 15.8: Differential Interest of all banks............................................................................................... 95
LIST OF FIGURE
Figure 6.1: XIth plan Capacity Addition Targets & Achievement ................................................................ 23 Figure 6.2: Capacity Addition Growth in plan wise manner ....................................................................... 24 Figure 6.3: Capacity Addition Private Sector ............................................................................................. 24 Figure 6.4: Investment in Power Sector...................................................................................................... 25 Figure 6.5: Investment targets by Government.......................................................................................... 26
INTERNATIONAL FINANCING ON POWER PROJECTS 1. EXECUTIVE SUMMARY

The report is all about the Maharatna Company (NTPC Ltd.) which is an integrated power producer and International Financing on power Projects. The introduction part deals with the role of public international financial institutions like Multinational Development Bank and Economic credit agency. Both of them has important role in international financing on coal fired power plants. The report elaborates various internationally financed projects on coal fired power plants. The report shows the increase in the capacity addition during XIth plan of all different sectors like private sector, state sector, central sector and all conventional & non- conventional sources of energy .The graph of capacity addition shows relationship between different sectors, its target & achieved value. A comparison of capacity addition during five year plans is shown with the help of graph which clearly indicates the amount of capacity added during these plans. The capacity addition in private sector comprises of different domestic companies which have different capacity addition values. During study of report we see financial closure of private capacity of XIth plan; we can calculate the total capital expenditure for conventional & non conventional source of energy. The report also includes the study of data of investment in different sector as well as conventional & non-conventional source of energy. The report also signifies the investments done by govt. and private players in power sector during Xth, XIth and XIIth plan (projected). The report includes various key aspects of international finance which have been discussed in the report for clear understanding of the subject, exchange rate which distinguish the domestic & international financing, role of Multinational Development Bank (World Bank, Asian Development Bank, International Finance Corporation & its function), types of loan, loan agreement which plays a vital role and the risk involved for foreign investors. Report discusses international financial funding of domestic companies like TATA POWER, RELIANCE POWER, NTPC, and ADANI POWER. RBI is the regulatory body responsible for the regulatory framework of international finance on External commercial Borrowing.
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INTERNATIONAL FINANCING ON POWER PROJECTS 2. ORGANIZATION PROFILE

NTPC, India's largest power company, was set up in 1975 to accelerate power development in India. It is emerging as an Integrated Power Major, with a significant presence in the entire value chain of power generation business. NTPC ranked 341st in the 2010, Forbes Global 2000 ranking of the Worlds biggest companies with a current generating capacity of 34,854 MW. NTPC has embarked on plans to become a 75,000 MW company by 2017. 2.1 Vision: - To be the worlds largest and best power producer, powering Indias growth. Mission: - Develop and provide reliable power, related products and services at competitive prices, integrating multiple energy sources with innovative and eco-friendly technologies and contribute to society. Core Value: - BCOMIT

Business Ethics Customer Focus Organizational & Professional Pride Mutual Respect & Trust Innovation & Speed Total Quality for Excellence
2.2Diversified Growth: As per new corporate plan, NTPC plans to become a 75 GW company by the year 2017 and envisages to have an installed capacity of 128 GW by the year 2032 with a well-diversified fuel mix comprising 56% coal, 16% gas, 11% nuclear energy, 9% renewable energy and 8% hydro power based capacity. As such, by the year 2032, 28% of NTPCs installed generating capacity will be based on carbon free energy sources. Further, the coal based capacity will increasingly be based on high-efficientlow-emission technologies such as Super-critical and Ultra-Super-critical. Along with this
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growth, NTPC will utilize a strategic mix of options to ensure fuel security for its fleet of power stations. Looking at the opportunities coming its way, due to changes in the business environment, NTPC made changes in its strategy and diversified in the business adjacencies along the energy value chain. In its pursuit of diversification NTPC has developed strategic alliances and joint ventures with leading national and international companies. NTPC has also made long strides in developing its Ash Utilization business. Hydro Power: In order to give impetus to hydro power growth in the country and to have a balanced portfolio of power generation, NTPC entered hydro power business with the 800 MW Koldam hydro projects in Himachal Pradesh. Two more projects have also been taken up in Uttarakhand. A wholly owned subsidiary, NTPC Hydro Ltd., is setting up hydro projects of capacities up to 250 MW. Renewable Energy: In order to broad base its fuel mix NTPC has plan of capacity addition of about 1,000 MW through renewable resources by 2017. Nuclear Power: A Joint Venture Company "Anushakti Vidhyut Nigam Ltd." has been formed (with 51% stake of NPCIL and 49% stake of NTPC) for development of nuclear power projects in the country. Coal Mining: In a major backward integration move to create fuel security, NTPC has ventured into coal mining business with an aim to meet about 20% of its coal requirement from its captive mines by 2017. The Government of India has so far allotted 7 coal blocks to NTPC, including 2 blocks to be developed through joint venture route. Power Trading: 'NTPC Vidyut Vyapar Nigam Ltd.' (NVVN), a wholly owned subsidiary was created for trading power leading to optimal utilization of NTPCs assets. It is the second largest power trading company in the country. In order to facilitate power trading in the country, National Power Exchange Ltd., a JV of NTPC, NHPC, PFC and TCS has been formed for operating a Power Exchange.
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Ash Business: NTPC has focused on the utilization of ash generated by its power stations to convert the challenge of ash disposal into an opportunity. Ash is being used as a raw material input by cement companies and brick manufacturers. NVVN is engaged in the business of Fly Ash export and sale to domestic customers. Joint ventures with cement companies are being planned to set up cement grinding units in the vicinity of NTPC stations. Power Distribution: NTPC Electric Supply Company Ltd. (NESCL), a wholly owned subsidiary of NTPC, was set up for distribution of power. NESCL is actively engaged in Rajiv Gandhi Gramin Vidyutikaran Yojanaprogramme for rural electrification. Equipment Manufacturing: Enormous growth in power sector necessitates augmentation of power equipment manufacturing capacity. NTPC has formed JVs with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing. NTPC has also acquired stake in Transformers and Electricals Kerala Ltd. (TELK) for manufacturing and repair of transformers. 2.3 Future Capacity Additions: NTPC has formulated a long term Corporate Plan up to 2032. In line with the Corporate Plan, the capacity addition under implementation stage is presented below:
PROJECT Coal
STATE
MW
1. Indira Gandhi STPP- JV with IPGCL & HPGCL ( 3 x 500) Haryana 2. Sipat I (3 x 660) 3. Simhadri II Unit - IV( 500) 4. velour I -JV with TNEB ( 2 x 500) 5. Velour Stage-I Phase-II -JV with TNEB ( 1 x 500) 6. Bongaigaon(3 x 250) 7. Mauda ( 2 x 500) 8. Rihand III(2X500) 9. Vindhyachal-IV (2X500) 10. Muzaffarpur Expansion (2x195) JV with BSEB Chhattisgarh Andhra Pradesh Tamilnadu Tamilnadu Assam Maharashtra Uttar Pradesh Madhya Pradesh Bihar
1000 1980 500 1000 500 750 1000 1000 1000 390
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11. Nabinagar TPP-JV with Railways (4 x 250) 12. Barh II (2 X 660) 13. Barh I (3 X 660) Hydro 1. Koldam HEPP ( 4 x 200) 2. Tapovan Vishnugad HEPP (4 x 130) 3. Singrauli CW Discharge(Small Hydro) Total 2.4 Subsidiaries: NTPC Electric Supply Company Ltd. (NESCL) The company was formed on August 21, 2002. It is a wholly owned subsidiary company of NTPC with the objective of making a foray into the business of distribution and supply of electrical energy, as a sequel to reforms initiated in the power sector. NTPC Vidyut Vyapar Nigam Ltd. (NVVN) The company was formed on November 1, 2002, as a wholly owned subsidiary company of NTPC. The companys objective is to undertake sale and purchase of electric power, to effectively utilize installed capacity and thus enable reduction in the cost of power. NTPC Hydro Ltd. (NHL) The company was formed on December 12, 2002, as a wholly owned subsidiary company of NTPC with an objective to develop small and medium hydroelectric power projects of up to 250 MW. Pipavav Power Development Co. Ltd. (PPDCL) A memorandum of understanding was signed between NTPC, Gujarat Power Corporation Limited (GPCL) and Gujarat Electricity Board (GEB) in 2004 for development of a 1000 MW thermal power project at Pipavav in Gujarat by forming a new joint venture company between NTPC and GPCL with 50:50 equity participation. Pursuant to the decision of Gujarat Government, NTPC Ltd. has dissociated itself from this company. PPDCL is under winding up. Himachal Pradesh Uttarakhand Uttar Pradesh 800 520 8 14748 Bihar Bihar Bihar 1000 1320 1980
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Kanti Bijlee Utpadan Nigam Limited, (formerly known as Vaishali Power Generating Company Limited) To take over Muzaffarpur Thermal Power Station (2*110MW), a subsidiary company named Vaishali Power Generating Company Limited (VPGCL) was incorporated on September 6, 2006 with NTPC contributing 51% of equity and balance equity was contributed by Bihar State Electricity Board. This company was formed to renovate the existing unit and run the plant. The second unit has been successfully re-synchronized on October 17, 2007 after 4 years of being idle. Renovation and modernization of the first unit is under progress. The company was rechristened as Kanti Bijlee Utpadan Nigam Limited on April 10, 2008. Bharatiya Rail Bijlee Company Limited (BRBCL) A subsidiary of NTPC under the name of Bharatiya Rail Bijlee Company Limited was incorporated on November 22, 2007 with 74:26 equity contribution from NTPC and Ministry of Railways, Govt. of India respectively for setting up of four units of 250 MW each of coal based power plant at Nabinagar, Bihar. Investment approval of the project was accorded in January, 2008. 2.5Business Development: NTPC, with a rich experience of engineering, construction and operation of over 30,000 MW of thermal generating capacity, is the largest and one of the most efficient power companies in India, having operations that match the global standards. Commensurate with our countrys growth challenges, NTPC has embarked upon an ambitious plan to attain a total installed capacity of 75,000 MW by 2017. Towards this end, NTPC has adopted a multi-pronged strategy such as Greenfield Projects, Brownfield Projects, Joint Venture and Acquisition route. Apart from this, NTPC has also adopted the Diversification Strategy in related business areas, such as, Services, Coal Mining, Power Trading, Power Exchange, Manufacturing to ensure robustness and growth of the company.
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2.6Balance Sheet: Mar '11 12 mths Sources Of Funds 8,245.46 8,245.46 0.00 0.00 60,138.66 0.00 68,384.12 9,910.68 33,277.56 43,188.24 111,572.36 Mar '11 12 mths Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits 72,583.94 33,519.19 39,064.75 38,441.84 12,344.84 3,639.12 7,924.31 326.34 11,889.77 7,648.10 15,858.92 66,663.80 32,088.80 34,575.00 32,290.60 14,807.10 3,347.70 6,651.40 634.00 10,633.10 6,357.10 13,825.50 62,353.00 29,415.30 32,937.70 26,404.90 13,983.50 3,243.40 3,584.20 271.80 7,099.40 7,826.10 15,999.80 53,368.00 27,274.30 26,093.70 22,478.30 15,267.20 2,675.70 2,982.70 473.00 6,131.40 9,936.20 14,460.20 50,604.20 25,079.20 25,525.00 16,962.30 16,094.30 2,510.20 1,252.30 750.10 4,512.60 8,781.70 12,564.50
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Mar '10 12 mths
Mar '09 12 mths
Mar '08 12 mths
Mar '07 12 mths
Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities
8,245.50 8,245.50 0.00 0.00 55,478.60 0.00 63,724.10 9,079.90 28,717.10 37,797.00 101,521.10 Mar '10 12 mths
8,245.50 8,245.50 0.00 0.00 50,749.40 0.00 58,994.90 8,969.60 25,598.20 34,567.80 93,562.70 Mar '09 12 mths
8,245.50 8,245.50 0.00 0.00 46,021.90 0.00 54,267.40 7,314.70 19,875.90 27,190.60 81,458.00 Mar '08 12 mths
8,245.50 8,245.50 0.00 0.00 40,351.30 0.00 48,596.80 7,479.60 17,661.50 25,141.10 73,737.90 Mar '07 12 mths
evalua

Total CA, Loans & Advances Deferred Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 35,396.79 0.00 10,945.55 2,730.31 13,675.86 21,720.93 0.00 111,572.36 33,227.29 82.94 30,815.70 0.00 7,896.80 3,070.50 10,967.30 19,848.40 0.00 101,521.10 40,044.00 77.28 30,925.30 0.00 7,439.20 3,249.50 10,688.70 20,236.60 0.00 93,562.70 66,083.20 71.55 30,527.80 0.00 5,548.40 7,360.60 12,909.00 17,618.80 0.00 81,458.00 29,361.80 65.81 25,858.80 0.00 5,422.20 5,280.30 10,702.50 15,156.30 0.00 73,737.90 25,218.80 58.94
2.7 SWOT analysis of NTPC Strengths: Core Team of expert professionals. Responsive Governance (Across the Board: Cooperation across management). Low Operating Costs. Excellent work Culture. Sound and state of the art Physical Infrastructure. Young and Dynamic workforce Aggressive toward development. Numerous Training Courses for the employees.
Weaknesses: High employee turnover. Still some departments work in isolation.
Opportunities:
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To compete economically with anybody in the country as well as in the world. Take advantage of technological revolution Mergers and acquisitions. Open access implementation. Great numbers of projects are coming up with the organization.
Threats: High competition from other companies. Change in Govt. policies Manpower shortage. Fuel availability.
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INTERNATIONAL FINANCING ON POWER PROJECTS 3. OBJECTIVE OF THE PROJECT

To know about role of the international financial institution or multinational development bank like ADB, WORLD BANK, IFC etc. for the financing in power projects. There are various questions regarding international financing for Indian power projects such as: How much amount of the foreign currencies invested in Indian power projects? How international financing is done for power projects? How foreign currencies are converted into the local currency? How application of international finance takes place for financing the power projects? Which factor distinguishes between domestic finance & international finance? On what condition lenders (multinational development banks) are ready to invest for Indian power projects? Which types of loan provided by lenders to the borrower for financing the power projects? What is the loan agreement between lenders & borrower? Why NTPC is better than other domestic companies like TATA POWER, ADANI POWER, and RELIANCE POWER etc.? What is the role of regulatory framework for international financing on infrastructure (power) projects? What are the risks for the foreign investors to finance the projects? Attempts are made to answer these questions in this report.
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INTERNATIONAL FINANCING ON POWER PROJECTS 4. SIGNIFICANCE OF THE PROJECT

A major significance of project is to help the borrower for choosing the multinational development banks, which are better for investment in power projects. Significance of the projects also lays in the fact the loan agreement between the borrower & lenders are relevant or not. It means all the conditions of borrower as well as lenders are satisfied to both of them. It includes commitment charges, disbursement fee, and event of default, repayment and prepayment charges, cancelation and suspensions. Significance of the project helps to the borrower for at how much interest rate to take loan. The loan given by lenders wants to give a certain maturity date to the borrower for return back currencies to him. Significance of the project consists to determine the exchange rate of two currencies of two different countries. Significance of the projects consist NTPC is superior to other domestic companies like TATA POWER, ADANI POWER, RELIANCE POWER. Significance of the projects consists External commercial borrowing guidelines of Reserve bank of India.
5. SCOPE OF THE PROJECT

International financial institution or multinational development banks are investing in power projects due to government budgetary constraints. India has huge amount of target installed capacity & NTPC has different target capacity on different plans.so that NTPC wants to reach at its own target value with the help of internationally finance. International financing does by competitive bidding process. International financing does takes place due to low interest rate. Risk of the investor would be reduced then proper financing work place.
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INTERNATIONAL FINANCING ON POWER PROJECTS 6. RESEARCH METHODOLOGY OF THE PROJECT

In the research methodology of the project determine the foreign exchange rate variation for different projects of NTPC. The Foreign Exchange Rate Variation (FERV) comes from Repayment value of Loan. Determine the whole net charge (interest charge) for all projects of NTPC provided loan from multinational development banks. Determine the weighted average of a particular multinational development Bank (KFW Bank) for different projects of NTPC. For calculation of weighted average of cost of capital we must have interest rate (coupon rate), issue price of debt, corporate tax, earning per share value, market price of ordinary share and weight of equity as well as debt. The formula for WACC is given below:WACC=Kd*(1-T)*(D/D+E) + Ke*(E/D+E) Kd=cost of debt T=corporate Tax D=Debt value E=Equity value Ke=cost of equity In the research methodology conversion of External Commercial borrowing into equity occurs. All the guidelines of ECB consider in the project report. In the research methodology of the project consider why NTPC is better than other domestic companies? The Market Cap value of NTPC is 137039.54 crore (BSE), 137245.68 crore (NSE) and the Market Cap value of ADANI POWER, RELIANCE POWER are 18726 crore, 21852 crore respectively. There are huge difference shows NTPC is better than ADANI POWER & RELIANCE POWER.
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INTERNATIONAL FINANCING ON POWER PROJECTS 7. INTRODUCTION

Public international finance is dominated by two kinds of institutions: - 1. Multilateral developments banks (MDB) and 2. Economic credit agencies (ECA). Among the MDBs, the World Bank Group and Asian Development Bank are the two most important for our study, but there are several others, including the Inter-American Development Bank (IDB), the African Development Bank (AFDB), the European Bank for Reconstruction and Development (EBRD), and the European Investment Bank (EIB).The largest ECAs among the 30 member nations of the OECD include the U.S. Export Import Bank and the Japan Bank for International Cooperation (JBIC). Table7.1: International Financiers of Coal fired plants
EDF identified $37.04 billion in public international financing for some 88 new coal plants and expansions and life extensions of existing plants since 1994.
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United States Export-Import Bank (EXIM) and Overseas Private Investment Corporation (OPIC), with some $4.164 billion for 19 different coal-fired projects. World Bank Group and the Asian Development Bank are the second and third largest single public financing institutions for the expansion of coal-fired power plants since 1994. Their financial commitments total $5.315 billion and $3.623 billion, respectively. Table7.2: - Capacity Addition Breakup (XIth) power plant
Figure7.1: XIth plan Capacity Addition Targets & Achievement
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Figure7.2: Capacity Addition Growth in plan wise manner
Figure7.3: Capacity Addition Private Sector
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Table7.3: Financial Closure Scenario for Private Capacity as per 11th plan
Table7.4: Investment Source / Sector Central State Private Total % age Hydro (MW) 8,654 3,482 3,491 15,627 20% 24,840 23,301 11,552 56,693 76% 3,380 4% 3,380 36,874 26,783 15,043 78,700 100% 47% 34% 19% 100% Thermal (MW) Nuclear (MW) Total % age
Figure7.4: Investment in Power Sector
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Figure7.5: Investment targets by Government
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INTERNATIONAL FINANCING ON POWER PROJECTS 8. KEY TERM OF INTERNATIONAL FINANCE

International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes the study of futures, options and currency swaps. International finance is a branch of international economics. Exchange rates (also known as the foreign-exchange rate or FX rate) between two currencies specify how much one currency is worth in terms of the other. It is the value of a foreign nations currency in terms of the home nations currency. For example an exchange rate of 91 Japanese yen (JPY, ) to the United States dollar (USD, $) means that JPY 91 is worth the same as USD 1. International trade is exchange of capital, goods, and services across international borders or territories. Currency swap involve two parties who agree to pay each others debt obligation denominated in different currencies. Interest swap involve exchange of interest obligations between two parties. Spot rate is the rate of exchange of the day on which the transaction has taken place and of the days the transaction is executed. Forward rate is the rate of exchange applicable for delivery of foreign exchange at a future date. Forward rate premium foreign currency is at premium when its forward rate is higher than spot rate. Forward rate discount foreign currency is at discount when its spot rate is higher than the forward rate. Cross rate is the rate of exchange of two currencies on the basis of exchange quotes of other pairs of currencies. Arbitrage is an act of buying currency in one market at a lower price and selling it in another price resulting in equilibrium in exchange rates of different currencies.
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Geographical arbitrage is the buying of foreign currency from a foreign exchange market where it is cheaper and selling in another foreign exchange market where it is costly. Triangular arbitrage involves three foreign currencies involving three different foreign exchange markets. It is also known as a three-point arbitrage. Purchasing power parity (PPP) theory is a theory of long-term equilibrium exchange rates based on relative price levels of two countries. Interest rate parity theory is a theory according to which the discount/premium of one currency in relation to another reflects the interest differentials between them. International Fisher effect states that the nominal interest rate differential must be equal to the expected inflation rate differential in two countries. Balance of payments (BOP) sheet is an accounting record of all monetary transactions between a country and the rest of the world. These transactions include payments for the country's exports and imports of goods, services, and financial capital, as well as financial transfers. Transaction exposure involves gain/loss arising out of the various types of transactions that require settlement in a foreign currency. Translation exposure results from the need to translate foreign currency assets/liabilities into local currency at the time of finalizing accounts. Economic exposure implies change in the value of a company that accompanies an anticipated change in exchange rates. Operating exposure has impact on firms future operating revenue, costs, and cash flows . Foreign exchange risk is the possibility of loss on account of unfavorable movement in foreign exchange rates.
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Foreign exchange risk management (FERM)-internal techniques:1. Leading implies collection from designated debtors expeditiously foreign currency before they are due (when home currency is expected to strengthen) and to initiate lead to pay foreign currency designated creditors before their due date of payment (when depreciation/devaluation of the home currency is apprehended). 2. Lagging implies delaying receipts from the foreign currency designated receivables whose currencies are likely to appreciate/strengthen and delaying foreign currency designated payables whose currencies are likely to depreciate/devalue/weaken. 3. Netting:-Foreign exchange risk exposure of such companies can be substantially reduced if foreign designated receivables and payments among them are settled on the net balance basis is known as netting. Foreign exchange risk management(FERM)-external techniques:1. Forward contracts are widely used by business firms to hedge against volatile/ adverse exchange market. Business firms enter into a forward contract to buy or sell foreign currency in exchange for home currency, normally at a specific future date , at a predetermined exchange
conversion rate is known as forward rate. 2. Futures contract is a standardized agreement to buy or sell a pre-specified amount of foreign currency in the future market at some specified future date between the parties to the contract. 3. Currency option is a financial instrument that provides its holder a right but no obligation to buy or sell a pre-specified amount of foreign currency at a pre-determined rate in the future. 4. Call option:-The holder has right to buy/call a specific currency at a specific price on a specific period of time. 5. Put option:-The holder has right to sell a specified amount of currency at a pre-fixed price on a specified date. 6. Money market operations:-It serves an important hedging function in that uncertainty is resolved regarding the amount to be paid. The steps involved are as follows:29

Step 1-Determine the amount required in foreign currency, to be paid on a specified date (3-4 months) from now. Step 2-From an authorized dealer (Bank) ascertain the spot exchange rate at which it is selling the required foreign currency in exchange for home currency. Step 3-Borrow home currency from the money market, at the prevailing interest rate. The quantum of borrowing should be in such a manner that can make the required foreign currency sums available on the date of payment (3-4 months). Step 4- The borrowed funds are to be used to buy the required foreign currency from the forex spot market; once purchased, it is to be invested in forex money market to yield interest in the desired foreign currency. Step 5-As per steps 3 and 4, the required amount of foreign currency to be purchased can be determined. Multinational capital budgeting decision:The major motivating factor in favour of foreign investments:(1). Comparative cost (2). Taxation (3). Financial diversification Incremental cash flow of the investment should be discounted at an opportunity cost of capital appropriate to the risk of investment. The investment should be accepted if the NPV is positive. Incremental cash outflows to undertake foreign investment decision are to be measured. Incremental cash inflows the foreign investment project is expected to yield during its projected economic useful life. operating cash flow(OCF)cash flow provided by operations or cash flow from operating activities, refers to the amount of cash a company generates from the revenues it brings in,
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excluding costs associated with long-term investment on capital items or investment in securities. The International Financial Reporting Standards defines operating cash flow as cash generated from operations less taxation and interest paid, investment income received and less dividends paid gives rise to operating cash flows. Free cash flow (NCF) is cash flow available for distribution among all the securities holders of an organization. They include equity holders, debt holders, preferred stockholders, convertible security holders. It should also allow for cash available to pay off the company's short term debt. It should also take into account any dividends that the company means to pay. Net Free Cash Flow = Operation Cash flow Capital Expenses to keep current level of operation dividends Current Portion of long term debt Depreciation. Cannibalization implies lost sales of existing products of a multinational company on account of proposed foreign investment. Sales creation implies increased sales on account of proposed foreign investment. Investment Evaluation The basic steps involved in evaluation of a project are:1. Determine net investment outlay. 2. Estimate net cash flows to be derived from the project over time, including an estimate of salvage value. 3. Identify the appropriate discount rate for determining the present value of the expected cash flows. 4. Apply NPV or IRR techniques to determine the acceptability or priority ranking of potential projects.
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Some of the factors unique to capital budgeting for MNCs are: 1. Conversion of cash flows from foreign projects into the currency of the parent firm. 2. Restrictions on full remittance of cash flows from foreign projects. 3. Exchange Rate fluctuations. 4. Application of different tax rates in the country of the project and in the parent's country. 5. Amenities and concessions granted by host country. 6. Benefits of international diversification to the shareholders of parent firm. 7. Lost exports. 8. Difficulty in estimating terminal value of foreign projects. 9. Differing rates of national inflation. 10. Knock-on effects of overseas investment projects on other operations elsewhere. 11. Political risk involved in foreign investment.
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INTERNATIONAL FINANCING ON POWER PROJECTS 9. DIFFERENCE BETWEEN DOMESTIC FINANCE & INTERNATIONAL FINANCE
International finance is to a great extent, similar to domestic corporate finance. A domestic company takes up a project for investment only when the net present value of cash flows is positive and it shapes the working capital policy in a way that maximizes profitability and ensures desired liquidity. It is not different in case of MNCs.
Again, the financing decisions, in respect of whether a domestic or an international company, aim at minimizing the overall cost of capital and providing optimum liquidity.
Domestic financial management is concerned with the costs of financing sources and the payoffs from investment. In domestic arena, movements in exchange rates are substantially ignored.
But In case of international financial management, there is no way that we can analyze international financing and investment opportunities without an understanding of the impact of foreign exchange rates upon the basic model of financial management.
However, international finance has a wider scope than domestic corporate finance and it is designed to cope with greater range of complexities than the domestic finance. The reasons are as follows:(a) The MNCs operate in different economic, political, legal, cultural and tax environments
(b) They operate across and within varied ranges of product and factor markets which vary in regard to competition and efficiency.
(c) They trade in a large number of currencies as a result of which their dependence on the foreign exchange market is quite substantial.
(d) They have easy access not only to varying domestic capital markets but also to unregulated international capital markets which differ in terms of efficiency and competitiveness.
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INTERNATIONAL FINANCING ON POWER PROJECTS 10.ROLE OF WORLD BANK, ADB, IFC

THE WORLD BANK The International Bank for Reconstruction and Development (IBRD), better known as the World Bank, was established at the same time as the International Monetary Fund (IMF) to tackle the problem of international investment.
Since the IMF was designed to provide temporary assistance in correcting the balance of payments difficulties, an institution was also needed to assist long-term investment purposes.
Thus, IBRD was established for promoting long-term investment loans on reasonable terms.
The World Bank (IBRD) is an inter-governmental institution, corporate in form, whose capital stock is entirely owned by its member governments.
Initially, only nations that were members of the IMF could be members of the World Bank; this restriction on membership was subsequently relaxed.
FUNCTIONS: 1. To assist in the reconstruction and development of the territories of its members by facilitating the investment of capital for productive purposes.
2. To promote private foreign investment by means of guarantee of participation in loans and other investments made by private investors and when private capital is not available on reasonable terms, to make loans for productive purposes out of its own resources or from funds borrowed by it.
3. To promote the long-term balanced growth of international trade and the maintenance of equilibrium in balances of payments by encouraging international investment for the development of the productive resources of members.
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4. To arrange loans made or guaranteed by it in relation to international loans through other channels so that more useful and urgent projects, large and small alike, will be dealt with first. It appears that the World Bank was created to promote and not to replace private foreign investment.
The Bank considers its role to be a marginal one, to supplement and assist foreign investment in the member countries.
A little consideration will show that the objectives of the IMF and IBRD are complementary. Both aim at increasing the level of national income and standard of living of the member nations.
Both serve as lending institutions, the IMF for short-term and the IBRD for long-term capital. Both aim at promoting the balanced growth of international trade.
ADB (ASIAN DEVELOPMENT BANK) ADB had started in 22nd august, 1963. The formalities were completed by mid-1966 and it started functioning in December 1966.
Its membership was open to the regional countries and the non-regional developed countries from where resources were to be obtained. Presently, it has 57 members---41 from the region and 16 from outside.
The chairman of the board of director is the president of the ADB. He is assisted by vicepresident and professional and non-professional staff members. In practices, decisions are taken by consensus, although there is provision for voting.
Every member country has one basic vote plus proportional votes depending upon the number of shares held in the capital structure. The regional members carry over two-thirds of the votes.
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The financial resource base is divided into two components. One is the ordinary capital resources (OCR) comprising equity and borrowings. The other is the special funds made up largely of contributions from member countries and specially meant for concessional lending and technical assistance.
Apart from OCR , there are three special funds namely the Asian Development Fund (ADF) , the Technical Assistance Development Special Fund (TASF) and the Japan Special Fund (JSF).
ADF is replenished by member countries to finance the concessional lending to poorer members and the replenishment is authorized from time to time by a resolution of the board of governor.
TASF is meant for financing the technical assistance operations. It created out of income from the ordinary lending operation, replenishments from member countries, direct voluntary contributions, and income from investment.
JSF was established in 1988 by way of contribution from japan for financing or co-financing on a grant basis the technical assistance projects and the private sector projects through equity investment.
FUNCTION
Being a regional development bank, ADB provides the following financial and technical assistance for economic development of developing member countries (DMC).
The ADB: 1. Makes loan and equity investments;
2. Provides technical assistance for preparing and carrying out development projects and programmer and advisory services;
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3. Helps mobilize additional resources within the region and helps attract investment from outside it; and
4. Assist regional and sub-regional schemes for the sake of promotion of regional economic cooperation.
IFC (INTRENATIONAL FINANCE CORPORATION)
Since IFC is an institution of the World Bank group, its organizational set-up is similar to that of the World Bank.
This means that the Board of Governor is the apex body.
The Board of Director implements the policies framed by the Board of Governors.
The president of the World Bank is the ex-officio president of the IFC. The president is assisted by the executive vice president who is in turn assisted by a large number of professional and non-professional staff.
The resources base of the IFC is similar to that of the IBRD. It presents a mix of equity capital and borrowed funds.
The IFC started borrowing in 1965 in order to finance its lending activities but only from the IBRD. In 1984 it began borrowing from the international capital market. During 1990s the size of borrowing expanded fast.
Apart from borrowings, the earning of the IFC too makes up its resource pool. The earning comes from interest and financial fees, dividend from equity investment, service fees, and income from the sale of securities, etc.
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FUNCTION
The IFC supplements the financing activities of the World Bank. It seeks to achieve the objectives through providing and bringing together finance, technical assistance and management.
This means that it extends not only financial and technical assistance, but also provides equity capital.
IFC provides loans and makes equity and quasi-equity investment.
Quasi-equity investment includes subordinated loans, convertible debt instruments, and preferred stock and income notes.
Unlike IBRD loans, these loans do not require government guarantee.
Long-term loans are made either on project cost basis or on corporate-finance basis. Those loans that are written against IFCs own account are known as A-loans.
Maturity ranges normally between 7 and 12 years, although it can be extended to 20 years and the grace period can go up to 4 years.
The loans are mostly direct loans, but are provided also through financial intermediaries like banks, leasing companies or financial institutions. In case where IFCs own funds do not permit making big loans, it seeks out commercial banks and other financial institutions to join in loan syndication and parallel financing. Such loans are known as B-loans.
IFCs Risk Management Services enable firms to access the derivative markets to hedge their exchange rate exposure or interest rate exposure.
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The Foreign Investment Advisory Service (FIAS) is being operated in collaboration with Multilateral Investment Guarantee Agency (MIGA) to provide technical advice to member countries on how to formulate policies and programs so as to attract foreign investment.
The Corporation collaborates also with the United Nations Development Program for technical assistance.
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11. TYPES OF LOAN
11.1 Investment loans: - Investment loan have a long-term focus (5 to 10 years), and finance goods, works and services in support of economic and social development projects in a broad range of sectors. Investment loans finance a wide range of activities aimed at creating the physical and social infrastructure necessary for poverty reduction and sustainable development. The important lending instruments are:-SIL, SIM, APL, LIL, TAL, FIL, ERL.
11.2Adjustment loans: - Adjustment loan have a short-term focus (1 to 3 years), and provide quick-disbursing external financing to support policy and institutional reforms. Eligibility for an adjustment loan also requires agreement on monitor able policy and institutional reform actions, and satisfactory macroeconomic management.
Coordination with the IMF is an essential part of the preparation of an adjustment loan. The important lending instruments are:-SAL, SECAL, PSAL, SSAL, RIL, and DRL. 11.3Specific Investment Loan Specific investment loans (SILs) support the creation, rehabilitation, and maintenance of economic, social, and institutional infrastructure. In addition, SILs may finance consultant services and management and training programs.
The SIL is a flexible lending instrument appropriate for a broad range of projects. SILs help to ensure the technical, financial, economic, environmental, and institutional Viability of a specific investment. They also support the reform of policies that affect the productivity of the investment. 11.4Sector Investment and Maintenance Loan Sector investment and maintenance loans (SIMs) focus on public expenditure programs in particular sectors. They aim to bring sector expenditures, policies, and performance in line with a countrys development priorities by helping to create an appropriate balance among new capital investments, rehabilitation, reconstruction, and maintenance.
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They also help the borrower develop the institutional capacity to plan, implement, and monitor expenditure or investment program.
The SIM is most appropriate where a sector expenditure program needs extensive coordination, particularly if the program involves a large share of donor-financed investments. Therefore, SIMs typically involves coordinated efforts among the multilateral and bilateral donors providing assistance to the sector. 11.5Adaptable Program Loan Adaptable program loans (APLs) provide phased support for long-term development programs. They involve a series of loans that build on the lessons learned from the previous loan(s) in the series.
An APL involves agreement on (1)The phased long-term development program supported by the loan, (2)Sector policies relevant to the phase being supported, and (3)Priorities for sector investments and recurrent expenditures.
They can be used to support a phased program of sector restructuring, or systemic reform in the power, water, health, education, and natural resource management sectors, where time is required to build consensus and convince diverse actors of the benefits of politically and Economically difficult reforms. 11.6Learning and Innovation Loan The learning and innovation loan (LIL) supports small pilot-type investment and capacitybuilding projects that, if successful, could lead to larger projects that would mainstream the learning and results of the LIL.
LILs do not exceed $5 million, and are normally implemented over 2 to 3 yearsa much shorter period than most Bank investment loans. All LILs include an effective monitoring and evaluation system to capture lessons learned.
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11.7Technical Assistance Loan The technical assistance loan (TAL) is used to build institutional capacity in the borrower country. It may focus on organizational arrangements, staffing methods, and technical, physical, or financial resources in key agencies.
TALs are used to build capacity in entities directly concerned with implementing policies, strategies, and reforms that promote economic and social development.
They also build capacity related to public sector reform and to the preparation, implementation, and maintenance of investments.
TALs often complement investment or adjustment operations by supporting specific tasks related to their preparation or implementation.
11.8Financial Intermediary Loan Financial intermediary loans (FILs) provide long-term resources to local financial institutions to finance real sector investment needs. The financial institutions assume credit risk on each subproject.
FILs help to develop sound financial sector policies and institutions, promote the operational efficiency of those institutions in a competitive environment, improve the terms of credit to enterprises and households, and promote private investment. 11.9Emergency Recovery Loan Emergency recovery loans (ERLs) support the restoration of assets and production Levels immediately after an extraordinary eventsuch as war, civil disturbance, or Natural disasterthat seriously disrupts a borrowers economy.
They are also used to strengthen the management and implementation of reconstruction efforts, and to develop disaster-resilient technology and early warning systems to prevent or
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Mitigate the impact of future emergencies. ERLs focus on the rapid reconstruction of economic, social, and physical systems within a limited period, normally 2 to 3 years.
They finance investment and productive activities, rather than relief or consumption. For recurring events such as annual flooding, or for a slow-onset disaster such as drought, a SIL is usually more appropriate.
11.10Structural Adjustment Loan The structural adjustment loan (SAL) supports reforms that promote growth, efficient use of resources, and sustainable balance of payments over the medium and long term.
SALs typically focus on major macroeconomic and structural issues that cut across sectors, such as trade policy, resource mobilization, public sector management, private sector development, and social safety nets.
11.11Sector Adjustment Loan The sector adjustment loan (SECAL) supports policy changes and institutional reforms in a specific sector. SECALs focus on major sectorial issues such as the incentive and regulatory Frameworks for private sector development, institutional capability, and sector expenditure programs.
11.12Programmatic Structural Adjustment Loan The programmatic structural adjustment loan (PSAL) is provided in the context of a multiyear framework of phased support for a medium-term government program of policy reforms and institution building.
PSALs respond to country needs for Bank financing and advice in support of structural and social reforms that involve continuous, incremental policy changes and institution building over several years.
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The focus is on step-by-step capacity building and reform, typically in the public sector, aimed at strengthening public expenditure management and improving governance, resource allocation, and public service delivery.
11.13Special Structural Adjustment Loan The special sector structural adjustment loan (SSAL) supports structural and social reforms by creditworthy borrowers approaching a possible crisis, or already in crisis, and with exceptional external financing needs.
These loans help countries to prevent a crisis or, if one occur, to mitigate its adverse economic and social impacts.
SSALs have different terms than other Bank loans. They carry a 5-year maturity with a 3-year grace period, and a minimum loan spread of 400 basis points over USD LIBOR equivalent. There are no waivers of interest or commitment charges.
11.14Rehabilitation Loan The rehabilitation loan (RIL) supports government policy reform programs aimed at creating an environment conducive to private sector investment, where foreign exchange is required for urgent rehabilitation of key infrastructure and productive facilities.
The focus is on key short-term macroeconomic and sector policy reforms needed to reverse declines in infrastructure capacity and productive assets.
11.15Debt Reduction Loan The debt reduction loan (DRL) helps eligible highly indebted countries reduce commercial debt and debt service to a manageable level, as part of a medium-term financing plan in support of sustainable growth. The focus is on rationalizing the countrys external commercial bank debt, by either converting it to lower-interest instruments or buying it back at a discount.
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INTERNATIONAL FINANCING ON POWER PROJECTS 12.LOAN AGREEMENT

12.1.1 ARTICLE I DEFINITIONS SECTION 1.01 Definitions "Assets" means all types of assets including property, revenue and claims of any kind. "Bank" means any Lender who gives the loan to the Borrower like Lender (African Development Bank). "Bank Agreement" means the Agreement Establishing the African Development Bank adopted on the 4th day of August 1963, as amended from time to time. "Borrower" means the party to the Loan Agreement to whom the Loan is made. "Category of Expenditure" means any category of goods, works and services of the Project to be financed from the resources of the Loan. "Closing Date" means the date specified in the Loan Agreement or such other later date as shall be agreed upon in writing among the Bank, the Borrower after which the Bank may terminate the right of the Borrower to request disbursements of the Loan. Co-financing means any financing specified in the Loan Agreement to be provided for the Project by a financier. "Currency" includes the currency of a country, the Special Drawing Right of the International Monetary Fund, the Unit of Account of the Bank and any other unit of account which represents a debt service obligation of the Bank to the extent of such obligation. "Currency of a Country" means the coin or currency which is legal tender in that country. "Date of Entry into Force" means the date on which the Loan Agreement shall enter into force. "Date of the Loan Agreement means the date specified in the Loan Agreement. "Executing Agency" means the entity, whether a legal person or not, which is designated for the implementation of the Project under the Loan Agreement. If more than one such entity is designated in the Loan Agreement, an Executing Agency refers separately to each such entity.
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"Fund" means the African Development Fund. "Guarantor" means the party to the Guarantee Agreement entered into with the Bank. "Guarantee Agreement" means the agreement entered into between the Bank and the Guarantor, to guarantee the Loan; as such agreement may be amended from time to time. Hedging Agreement means any derivative agreement entered into between the Bank and the Borrower in connection to any financial obligations to the Bank related to a loan. "Interest Period" means the interest period defined in the Loan Agreement. "Lien" means any security provided for the payment of a debt, including mortgages, pledges, charges, privileges and priorities of any kind. "Loan" means the maximum amount of the resources granted by the Bank as specified in the Loan Agreement. "Loan Account" means the account opened by the Bank on its books in the name of the Borrower to record the Loan as well as disbursements and repayments of the Loan. "Loan Agreement" means the agreement entered into between the Bank and the Borrower providing for the Loan; as such agreement may be amended from time to time. "Loan Currency" means the Currency or Currencies selected by the Borrower for the Loan, and the payment obligations thereunder. "Loan Savings" means any undisbursed amount of the Loan available (i) when the Project has been fully terminated without any significant change from the initial Project description or its design and disbursements have been effected in respect of all goods, works, and services thereunder, or (ii) when the Project nearing completion is progressing satisfactorily according to the implementation schedule with arrangements finalized for procurement of all goods, works and services and provisions made for outstanding payments. "Member State" means a member State of the Bank.
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"Project" means the Project or Program for which the Loan is granted, as described in the Loan Agreement and as the description thereof may be amended from time to time by agreement between the Bank and the Borrower. "Public Entity" means any Legal Entity in which a Regional Member State and/or its political or administrative sub-division hold more than fifty per cent (50%) of the shares and/or of the voting rights. "Single Currency Loans" mean the lending products introduced by the Bank with effect from October 1, 1997, as amended from time to time. "Special Commitment" means any Special Commitment entered into by the Bank. "Taxes" means all taxes, imposts, levies, fees and duties of any nature, whether in effect at the Date of the Loan Agreement imposed. 12.1.2 ARTICLE II LOAN ACCOUNT - COMMITMENT CHARGE - SPECIAL COMMITMENT CHARGE AND REPAYMENT SECTION 2.01 Loan Account The amount of the Loan shall be entered in the books of the Bank and such amount may be disbursed to the Borrower as provided in the Loan Agreement. SECTION 2.02 Commitment Charge (a) The Bank may charge a Commitment Charge on terms and conditions to be provided in the Loan Agreement. (b) The Borrower shall pay the Commitment Charge on the undisbursed amount of the Loan at the rate specified in the Loan Agreement. Such Commitment Charge shall begin to accrue 60 days from the Date of the Loan Agreement, or on such other date as the Bank shall from time to time determine. With respect to any amount under the Loan, the Commitment Charge shall accrue until (i) the date on which such amount is disbursed to the Borrower or (ii) the date on which such amount is cancelled or (iii) the Closing Date, whichever date comes first. The Commitment Charge shall be payable on each interest payment date commencing on the first interest payment date following the Date of Entry into Force. The commitment charge shall be
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expressed in the Currency loaned.
(c) Any Commitment Charge as stated in paragraph (b) of this Section which has become due and payable during the provisional effectiveness of the Loan Agreement, shall remain due and payable to the Bank notwithstanding the non-entry into force, the cancellation or the termination of the Loan Agreement. SECTION 2.03 Interests (a) The Borrower shall pay interest at the rate specified in the Loan Agreement on the amount of the Loan disbursed and outstanding from time to time. Interest shall accrue from the respective dates on which such amounts are disbursed. (b) The Bank may establish an alternate interest rate which shall be applicable if for any reason, including, but not limited to, financial market disruption, the Bank determines that it has become impossible to calculate the interest rate in the manner agreed upon in the Loan Agreement. In such case, the Borrower shall have the right to prepay the Loan without thereby incurring any penalty or prepayment costs. (c) In establishing such alternate interest rate, the Bank shall consult with the Borrower, in order to decide on a substitution formula allowing the Bank to keep the same margin as the margin defined in the Loan Agreement. This formula shall apply retroactively from the first day of the Interest Period during which this impossibility to compute the interest rate has been notified, up to the total reimbursement of the principal of the Loan, interests, prepayment costs, Special Commitment Charge, Commitment Charge and other charges due under the Loan Agreement, or up to the date of notification by the Bank of the cessation of the event which caused the application of the alternate interest rate. SECTION 2.04 Application of Payment Except as the Bank may otherwise decide, all payments by the Borrower shall be applied, as the case may be, in the following order: Commitment Charge, Special Commitment Charge, other charges, prepayment costs, interest and principal.
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SECTION 2.05 Computations of Interest and Commitment Charge Interest and Commitment Charge shall be computed on a daily basis in accordance with the provisions of the Loan Agreement. SECTION 2.06 Repayments and Prepayment (a) Except as provided in Section 3.04(e), the Borrower shall repay the principal amount of the Loan which has been disbursed in accordance with the provisions of the Loan Agreement. (b) Upon payment of all accrued interest, Commitment Charge, Special Commitment Charge and other charges, and any prepayment costs calculated in accordance with Section 2.06(c), except as provided in Section 3.04(d)(ii), and after giving not less than 45 days notice to the Bank . The Borrower shall have the right to repay, as of a date acceptable to the Bank, in advance of maturity: (i) the entire principal amount of the Loan then outstanding, or (ii) the entire principal amount of any one or more maturities which, unless otherwise specified by the Borrower in the prepayment notice, shall be applied pro-rata to all outstanding Loan maturities. (c) The prepayment costs payable under paragraph (b) of this Section on prepayment of any maturity shall, subject to the specific terms governing Single Currency Loans, be an amount reasonably determined by the Bank to represent any cost to the Bank of redeploying the amount to be prepaid from the date of prepayment to the maturity date, provided the Bank may, in its sole discretion, waive the requirement of payment of any prepayment costs. (d) Each request for prepayment notified to the Bank by the Borrower in accordance with this Section shall be irrevocable and the amount to be prepaid shall automatically become due on the date accepted by the Bank.
SECTION 2.07 Place of Payment The principal of interest, prepayment costs, Special Commitment Charge, Commitment Charge and other charges on the Loan shall be paid at such place(s) as the Bank shall indicate. SECTION 2.08 Payments Falling Due on Public Holidays
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Any payment or other obligation which is due under the Loan Agreement to be affected on a non-working day or a public holiday, according to the relevant local law, shall be considered made or fulfilled if it is affected on the first working day thereafter, without any penalty or additional costs to the Borrower. SECTION 2.09 Promissory Notes At the request of the Bank, the Borrower shall, within the specified period, execute and deliver to the Bank, in such form as the Bank shall prescribe, promissory notes or other negotiable instruments, guaranteed, if necessary, by the Guarantor, representing the obligation of the Borrower to repay the principal of the Loan together with interest, Special Commitment Charge, Commitment Charge and other charges. SECTION 2.10 Restrictions The repayment of the principal as well as the payment of interest, prepayment costs, Special Commitment Charge and other charges relating to the Loan shall not be hindered by any restrictions, regulations, controls of any kind imposed under the legislation of the Borrower. 12.1.3 ARTICLE III CURRENCY PROVISIONS SECTION3.01. Currencies in which Disbursement is to be made (a) Subject to the Bank's right of Currency substitution in accordance with Section 3.04, disbursements from the Loan Account shall be made in the Loan Currency in an amount equivalent to the expenditures to be financed out of the proceeds of the Loan. (b) In the case of expenditures incurred in a Currency other than the Loan Currency, if the Borrower requests payment in the Currency of the expenditures, the Bank will, provided such expenditures are in readily available Currency exchange such Currency in such manner as the Bank may deem appropriate. The equivalent disbursement amount shall be determined by the Bank including the exchange costs that would have been incurred by the Bank in using the Loan Currency to meet the request. The costs of such Currency exchange shall be communicated to the Borrower.
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SECTION 3.02 Loan Account Currencies (a) Except as provided in Section 3.02 (b), the Loan Account shall be maintained in the Loan Currency and shall record the equivalent as of the date of disbursement and repayment in the Loan Currency of the amounts in various Currencies disbursed and repaid under the Loan from time to time. All amounts so recorded shall be the equivalent in the Loan Currency of the Currency disbursed or repaid, except that if the Bank has exchanged the Currency disbursed from another Currency in order to provide for such disbursement, then the equivalent in the Loan Currency of the amount of such other Currency paid by the Bank shall be recorded in the Loan Account instead. (b) For loans made in several Currency tranches, the Loan Account shall be divided into multiple sub-accounts, each one to be maintained in the Loan Currency of each tranche. Each sub-account shall record the equivalent as of the date of disbursement and repayment in the respective Loan Currency of the amounts in various Currencies disbursed or repaid, except that if the Bank has exchanged the Currency disbursed with another Currency in order to provide for such disbursement then the equivalent of the amount of such other Currency paid by the Bank shall be recorded in the sub-account instead. SECTION3.03. Currencies in which Payments to the Bank are Payable (a) Except as provided in Section 3.04(g), repayment of principal and payment of prepayment costs, interest, Special Commitment Charge, Commitment Charge and other charges shall be made in the Loan Currency. (b) If the Borrower so requests, the Bank may, acting on behalf of the Borrower, and on such terms and conditions as the Bank shall determine, purchase the Loan Currency for the purpose of the repayment of principal and payment of prepayment costs, interest, Special Commitment Charge, Commitment Charge and other charges, upon timely payment by the Borrower of sufficient funds for that purpose in a Currency or Currencies acceptable to the Bank. However, that such repayment or payment shall be deemed to have been paid only when and to the extent that the Bank has received the payment in the Loan Currency.
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SECTION 3.04 Temporary Currency Substitutions (a) If the Bank reasonably determines that an extraordinary situation, whether factual or legal, has arisen under which the Bank is unable to provide the Loan Currency for purposes of funding Single Currency Loans, then the Bank shall promptly notify the Borrower of its inability to access or procure the Loan Currency after becoming aware of such inability. If within 60 days following such notification the Bank and the Borrower cannot agree on a substitute Currency, the Borrower may cancel the undisbursed portion of the Loan for which an agreement has not been reached as to the currency of substitution. (b) For each payment, the date of conversion between the Loan Currency and the substitute currency shall be the date of disbursement of the substitute currency. (c) The interest rate applicable to Loan amounts disbursed in the substitute currency shall be the interest rate applicable to similar single currency loans in such substitute currency at the time of disbursement. The Bank shall duly notify the Borrower of such interest rate. (d) During the period of operation of the Currency substitution: (i) The substitute Currency shall be deemed to be the Loan Currency for purpose of Loan Agreement. (ii) No prepayment costs shall be payable on prepayment of the Loan. (iii) Repayment of principal and payment of interest, prepayment costs, Special Commitment Charge, Commitment Charge and other charges shall be made in the Loan Currency and/or in such temporary substitute Currency as the Bank shall have selected. (iv)The Bank shall reasonably determine the guiding principles for the conversion of amounts from the Loan Currency to the substitute Currency. (e) The Bank may, by notice to the Borrower, modify the principal amount of any one or more maturities of the Loan provided for in the Loan Agreement, maturing after the establishment of any such substitute Currency to reflect changes in value as provided for in Section 3.04(d) (iv).
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(f) The Currency substitution shall be terminated as soon as practicable once the Bank becomes able to provide again the original Loan Currency. (g) All funds disbursed in a substitute Currency shall be repaid in the substitute Currency. Section 3.05 Valuation of Currencies For the purposes of the Loan Agreement, whenever it shall be necessary to determine the value of one Currency in terms of another Currency, such value shall be as reasonably determined by the Bank. The Bank shall notify the Borrower. 12.1.4 ARTICLE IV DISBURSEMENT OF THE LOAN SECTION 4.01 Disbursement of the Loan The Borrower shall be entitled to request from the Bank the disbursement of funds for amounts expended for purposes of the Project, in accordance with the provisions of the Loan Agreement provided that, except with the consent of the Bank. No disbursements shall be made: (a) on account of expenditures procured in violation of the Banks procurement rules (b) subject to the terms of the Loan Agreement, to finance expenditures incurred prior to the Date of the Loan Agreement.
SECTION 4.02 Special Commitments by the Bank The Bank may, at the request of the Borrower and upon such terms and conditions as shall be agreed upon between the Bank and the Borrower enter into special commitments in writing to pay amounts to the Borrower or others in respect of expenditures to be financed out of the proceeds of the Loan notwithstanding any subsequent suspension or cancellation by the Bank or the Borrower. The Borrower shall pay a charge (special commitment charge) at the rate specified in the Loan Agreement. SECTION 4.03 Requests for Disbursement or for Special Commitment If the Borrower seeks disbursement of any amount from the Loan Account the Bank to enter into a Special Commitment, the Borrower shall deliver to the Bank a written request in such form,
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and containing such statements, agreements, undertakings and documents as the Bank shall reasonably request. Requests for disbursement, including the documentation required pursuant to this Article, shall be made promptly and in conformity with the disbursement rules and procedures determined by the Bank from time to time.
SECTION 4.04 Payments by the Bank The Loan funds disbursed shall be payable by the Bank to, or on the order of, the Borrower in accordance with the terms of the Loan Agreement.
SECTION 4.05 Reallocation and Loan Savings (a) The Bank may, at the request of the Borrower, and in accordance with its policies as applicable from time to time, modify the allocation of expenditures of the Project to be financed from the Loan. (b) The reallocation of the Loan funds from one Category of Expenditures to another or within the same Category of Expenditures shall not, however be made if such reallocation would in the opinion of the Bank (i) compromise the execution of the Project (ii) substantially modify the nature or objectives of the Project. (c) Loan Savings may be allocated in accordance with the policy of the Bank as determined from time to time.
SECTION 4.06 Evidence of Authority to Sign Requests for Disbursement The Borrower shall provide the Bank with evidence of the authority of the person or persons authorized to sign requests for disbursement and the authenticated specimen signature(s) of any such persons
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. SECTION 4.07Supporting Evidence The Borrower shall provide the Bank with such documents and other evidence as the Bank shall request in support of any request for disbursement, in accordance with its disbursement rules and procedures. SECTION4.08. Sufficiency of Requests and Documents Each request for disbursement and the accompanying documents and other evidence shall be sufficient in form and substance to satisfy the Bank that the Borrower is entitled to obtain the disbursement of the amount requested for and that the said amount is to be used only for the purposes specified in the Loan Agreement. SECTION 4.09 Treatments of Taxes If permitted by the Loan Agreement, the use of any proceeds of the Loan to pay for Taxes levied by, or in the territory of, the Member State in respect of the importation, manufacture, procurement or supply of any goods, works or consultancy services is subject to the Banks policy of requiring economy and efficiency in the use of the proceeds of its loans. To that end, if the Bank at any time determines that the amount of any such Tax is excessive, or that such Tax is discriminatory or otherwise unreasonable, the Bank may, by notice to the Borrower, decline to finance any such amount, as required to ensure consistency with such policy of the Bank. 12.1.5 ARTICLE V CANCELLATION AND SUSPENSION SECTION 5.01 Cancellations by the Borrower (a) The Borrower may by notice to and after consultation with the Bank, cancel the whole or part of the Loan which has not been disbursed, except that the Borrower may not so cancel any amount of the Loan in respect of which the Bank has entered into a Special Commitment. (b) For purposes of paragraph (a) of this Section, the Borrower shall give 60 day notice to the Bank of its intention to cancel all or part of the Loan and its reasons for so doing. The Bank shall notify the Borrower of the date of receipt of such notice and shall consult with the Borrower on the reasons for its request for cancellation. Unless the parties otherwise agree, the cancellation
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shall take effect 60 days from the date of receipt by the Bank of the Borrowers cancellation notice. SECTION 5.02 Suspensions by the Bank 1) If any of the following events has occurred and is continuing, the Bank may, by notice to the Borrower, suspend in whole or in part the right of the Borrower to request for and receive disbursements from the Loan Account: Payment Failure (a) The Borrower has failed to make payment when due of principal, interest, prepayment costs, commitment charge or any other amount due to the Bank: (i) under the Loan Agreement, (ii) under any other agreement between the Bank and the Borrower, (iii) in consequence of any guarantee or other financial obligation of any kind extended by the Bank to any third party with the agreement of the Borrower, or (iv) under any agreement between the Borrower and the Fund or between the Borrower and any Bank Managed Fund. (b) The Guarantor has failed to make payment of principal, interest, prepayment costs, commitment charge or any other amount due to the Bank or the Fund: (i) under the Guarantee Agreement, (ii) under any other agreement between the Guarantor and the Bank, (iii) in consequence of any guarantee or other financial obligation of any kind extended by the Bank to any third party with the agreement of the Guarantor.
Performance Failure (c) The Borrower has failed to perform any other obligation under the Loan Agreement or any Hedging Agreement, the Bank determines that the Project objectives cannot be achieved. Cross-suspension (d) The Bank has suspended in whole or in part the right of the Borrower to request or receive disbursements under any agreement with the Bank, because of a failure by the Borrower to perform any of its obligations under such agreement with the Bank.
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Events Prior to Effectiveness (e) After the Date of the Loan Agreement and prior to the Date of Entry into Force, any event has occurred which would have entitled the Bank to suspend the Borrower's right to request for and receive disbursements from the Loan Account if the Loan Agreement had been effective on the date such event occurred. Co-financing (f) Any of the following events occurs with respect to any Co-financing: (i) If the Loan Agreement specifies a date by which the agreement with such financier providing for the Co-financing is to become effective, such co-financing agreement has failed to become effective by that date, or such later date as the Bank has established by notice to the Borrower provided, however, that the provisions of this sub-paragraph shall not apply if the Borrower establish to the satisfaction of the Bank that adequate funds for the Project are available from other sources on terms and conditions consistent with the obligations of the Borrower under the Loan Agreement . (ii) Subject to sub-paragraph (iii) of this paragraph: (A) the right to withdraw the proceeds of the Co-financing has been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the relevant co-financing agreement; or (B) the Co-financing has become due and payable prior to its agreed maturity. (iii) Sub-paragraph (ii) of this subsection shall not apply if the Borrower establish to the satisfaction of the Bank that: (A) such suspension, cancellation, termination or pre-maturing was not caused by the failure of the recipient of the Co-financing to perform any of its obligations under the relevant agreement; and (B) adequate funds for the Project are available from other sources on terms and conditions consistent with the obligations of the Borrower under the Loan Agreement. (g) Condition of Borrower (i) Any material adverse change in the condition of the Borrower which materially affects the financial ability of the Borrower to repay the Loan has occurred.
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(ii) The Borrower has become unable to pay its debts as they mature or any action has been taken by the Borrower or by others whereby any of the Assets of the Borrower shall or may be distributed among its creditors. (iii) Any action has been taken for or suspension of operations of the Borrower. (iv) In the opinion of the Bank, the legal character, ownership or control of the Borrower has changed from that prevailing as of the date of the Loan Agreement so as to materially and adversely affect the ability of the Borrower to perform any of its obligations arising under or entered into pursuant to the Loan Agreement, or to achieve the objectives of the Project.
SECTION 5.03 Cancellations by the Bank 1) The Bank may, by notice to the Borrower, cancel the whole or part of the Loan, as the case may be, if: (a) Interruption of the Project: Project operations shall be deemed to have ceased if no disbursement has been made for a continuous period of two years. (b) Suspension: the right of the Borrower to disbursement of the Loan, has been suspended with respect to any amount of the Loan for a continuous period of 30 days. (c) Amount not Required: at any time, the Bank determines, after consultation with the Borrower, that an amount of the Loan will not be required to finance any Project costs previously allocated to be financed out of the Loan proceeds; (d) Closing Date: on the day following the Closing Date, an amount of the Loan shall not have been disbursed; (g) Cancellation of Guarantee: the Bank has received prior notice from the Guarantor pursuant to Section 5.06 (b) with respect to an amount of the Loan. (h) Modification of the Project: the Borrower has modified the nature or the objectives of the Project financed from the resources of the Loan.
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Upon the giving of such notice, such amount of the Loan shall be cancelled on the date decided by the Bank and indicated in the notice, provided that : (i) in the case of paragraph (a) above, the Borrower shall be given not less than three 3 months notice in writing within which it may submit all or any outstanding disbursement requests for settlement by the Bank prior to Loan cancellation, and (ii) in the case of paragraph (c) above, a consultation with the Borrower is carried out as indicated in sub-section (2) below. 2) Consultation as required in paragraph (c) of sub-section (1) above must be carried out within 60 days after the date the Bank gives notice of its intention to cancel such amount of the Loan not required to finance any Project costs previously allocated to be financed out of the Loan proceeds. In the absence of an agreement to the contrary within such 60 day period, the cancellation will become effective on the date of expiry of the above-mentioned period. SECTION 5.04 Amounts Subject to Special Commitment not Affected by Cancellation or Suspension by the Bank. No cancellation or suspension by the Bank shall apply to amounts subject to any Special Commitment except as expressly provided in such Special Commitment.
SECTION 5.05Effectiveness of the Provisions of the Loan Agreement after Suspension or Cancellation Notwithstanding any cancellation or suspension, as provided for in Sections 5.01, 5.02 and 5.03 above, the provisions of the Loan Agreement shall continue in full force and effect. SECTION5.06. Cancellation of Guarantee (a) If the Borrower has failed to make payment of principal or interest or any other payment required under the Loan Agreement, and such payment has been made by the Guarantor, the Guarantor may after consultation with the Bank, and by notice to the Bank and the Borrower, terminate its obligations under the Guarantee Agreement with respect to any amount of the Loan undisbursed from the Loan Account on the date of receipt of such notice by the Bank and not
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subject to any Special Commitment. Upon receipt of such notice by the Bank, and subject to paragraph (b) below, the Guarantors obligations in respect of such amount shall terminate. (b) For the purposes of paragraph (a) of this Section, the Guarantor shall give prior notice to the Bank of its intention to terminate its obligations under the Guarantee Agreement. The Bank and the Guarantor shall have 60 days from the date of receipt of the notice by the Bank to consult each other. If at the expiry of this notice period there is no agreement between the parties, the Guarantor may notify the Bank of the termination of its obligations. 12.1.6 ARTICLE VI ACCELERATION TO MATURITY SECTION 6.01 Events of Acceleration If any of the following events occurs and continues for the period specified, as the case may be, the Bank may, at its option, by notice to the Borrower , declare all or part of the principal of the Loan then outstanding to be due and payable immediately together with the interest, prepayment costs, Special Commitment Charge, Commitment Charge and other charges thereon and upon any such notice, such principal together with the interest, prepayment costs, Special Commitment Charge, Commitment Charge and other charges thereon shall become due and payable immediately from the date of such notification: Payment Default (a) A default occurs in the payment of principal or interest or any other payment required under the Loan Agreement and such default shall continue for a period of 30 consecutive days. (b) A default occurs in the payment by the Borrower of principal or interest or any other amount due to the Bank: (i) under any other loan agreement between the Bank and the Borrower (ii) in consequence of any guarantee or other financial obligation of any kind extended by the Bank to any third party with the agreement of the Borrower (iii) under any loan agreement between the Bank and the Borrower, and such default shall continue for a period of 30 consecutive days.
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Performance Default (c) A default occurs in the performance of any other obligation on the part of the Borrower under the Loan Agreement or any Hedging Agreement, and such default shall continue for a period of 60 days after notice thereof has been given by the Bank to the Borrower. 12.1.7 ARTICLE VII TAXES SECTION 7.01 Taxes (a) The principal of, and interest, Special Commitment charge, commitment charge and other charges on, the Loan shall be paid without deduction for, and free from, any taxes levied in the territory of the country of the Borrower. (b) The Loan Agreement shall be free from any taxes levied in the territory of the country of the Borrower.
12.1.8 ARTICLE VIII PROJECT IMPLEMENTATION - COOPERATION AND INFORMATION-FINANCIAL AND OTHER INFORMATION - NEGATIVE PLEDGE (PARI PASSU) SECTION 8.01Project Implementation The Borrower shall carry out the Project and/or cause the Executing Agency to carry out the Project: (a) With due diligence and efficiency; (b) In conformity with all applicable laws and regulations; (c) In conformity with appropriate administrative, technical, financial, economic, environmental and social standard and practices; and (d) In accordance with the provisions of the Loan Agreement, as well as any performance arrangement to be entered into between the Borrower and the Executing Agency. SECTION 8.02Cooperation and Information
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(a) The Bank and the Borrower, as the case may be, shall cooperate fully to ensure that the purposes of the Loan will be accomplished. To that end, the Bank, the Borrower shall: (i) From time to time, at the request of any one of them, exchange views with regard to the progress of the Project, the purposes of the Loan, and the performance of their respective obligations under the Loan Agreement and provide to the other party all such information related thereto as it shall reasonably request. (b) The Borrower and the Guarantor shall afford all reasonable opportunity for representatives of the Bank to visit any part of the territory of their country for purposes related to the Loan and enable the Bank's representatives to visit any facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any plants, installations, sites, works, buildings, property, equipment, records and documents relevant to the performance of the obligations of the Borrower under the Loan Agreement. (c) The Borrower shall permit staff and other representatives of the Bank including members of the Bank's Compliance Review and Mediation Unit or its Independent Review Mechanism to perform their functions including conducting investigations, as necessary. In this connection, the Borrower shall provide such representatives of the Bank relevant information and facilitate the examination of records, accounts and other documents or interview relevant persons, as determined by the Bank. SECTION8.03. Financial and Other Information The Borrower shall provide to the Bank the information that the Bank shall request relating to their respective organizational structure, operations, financial situation and, in particular, financial statements. SECTION8.04. Negative Pledge (a) In providing a Loan, the Bank may require that the Regional Member State, or a public institution of the Regional Member State in whose territory the Borrower is located or incorporated, provides a Guarantee and/or request that the Borrower provides such other assurances to the effect that the Borrower shall fulfill its obligations to the Bank. Such securities may be enforced in accordance with their governing law.
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(b) The Borrower undertakes that, except as the Bank shall otherwise agree: (i) if such Borrower shall create any Lien on any of its Assets as security for any debt, such Lien will equally secure the payment of the principal of, and interest, prepayment costs, Special Commitment Charge, Commitment Charge and other charges on, the Loan and in the creation of any such Lien express provision will be made to that effect, at no cost to the Bank. (c) The foregoing provisions of paragraph (b) of this Section shall not apply to: (i) any Lien created on property, at the time of purchase thereof, solely as security for the payment of the purchase of such property (ii) any Lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after the date on which it is originally incurred. SECTION8.05. Insurance The Borrower shall insure or cause to be insured the goods to be financed out of the proceeds of the Loan against hazards incidental to the acquisition, transportation, delivery, installation and use thereof during the entire period of Project implementation until completion. Any indemnity for such insurance shall be payable in a freely usable Currency to replace or repair such goods. SECTION8.06. Plans and Schedules The Borrower shall promptly provide, or cause to be provided, to the Bank upon their preparation, copies of any plans, specifications, reports, contract documents, construction, and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request.
SECTION8.07. Accounts, Records and Audit (a) The Borrower shall cause the Executing Agency to: (i) Maintain records and procedures adequate to record and monitor the progress of the Project (including its costs and the benefits to be derived from it, according to indicators acceptable to the Bank), to identify the goods, works and services financed out of the proceeds of the Loan, and to disclose their use in the Project;
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(ii) Provide to the Bank reports in form and substance satisfactory to the Bank on the execution of the Project, including recommendations to ensure the continued effective and efficient execution of the Project with a view to achieve its objective, at such intervals as provided by the applicable Bank policy and in accordance with the directives which the Bank shall from time to time issue to that end. (iii) Provide to the Bank at regular intervals all such information and reports as the Bank shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the participation of Project beneficiaries in the implementation and supervision of the Project, the expenditure of the proceeds of the Loan and the goods, works and services financed out of such proceeds. (b) The Borrower shall provide the audited financial statements to the Bank as promptly as possible and, in any event, not later than 6 months after the end of the relevant financial year. (c) The Borrower shall cause the Executing Agency to, keep all records (contracts, orders, invoices, bills, receipts and other documents) evidencing expenditures financed with the Loan until the later of: (i) one year after the Bank has received the audited financial statements covering the period during which the last disbursement of the Loan was made (ii) two years after the Closing Date. The Borrower shall enable the Banks representatives to examine such records.
12.1.9 ARTICLE IX - SETTLEMENT OF DISPUTES - APPLICABLE LAW SECTION 9.01 Settlements of Disputes (a) Except for liens and other securities taken where the Bank can decide to enforce its rights in accordance with the law governing the creation of such securities, any controversy between the parties to the Loan Agreement and any claim by a party against the other party arising under the Loan Agreement will be settled. If no settlement is reached within 90 days from the date notification is given by one party of a request for submission of the dispute to settlement, the dispute may be submitted to arbitration, as provided hereunder, by either party.
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(b) Except as otherwise specified in this Section, the arbitration shall be conducted in accordance with the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules. The parties to such arbitration shall be the Bank on the one side and the Borrower and on the other side. (c) The arbitral tribunal shall consist of three arbitrators appointed as follows: One arbitrator shall be appointed by the Bank; a second arbitrator shall be appointed by the Borrower, and the third arbitrator (sometimes called the Umpire) shall be appointed by the two arbitrators first appointed by the parties. If within 30 days from the date of notification of the submission to arbitration, either side fails to appoint an arbitrator, such arbitrator shall be appointed by the appointing authority. If within 60 days after the notice instituting the arbitration proceeding, the two arbitrators shall not have agreed upon an Umpire, any party may request the appointing authority to designate the Umpire. In case any arbitrator appointed in accordance with this Section resigns, dies or becomes unable to act, a successor arbitrator shall be appointed in the same manner as herein prescribed for the appointment of the original arbitrator and such successor shall have all the powers and duties of such original arbitrator.
SECTION 9.02 Applicable Law Unless otherwise provided in the Loan Agreement, the law to be applied to the Loan Agreement shall be public international law, the sources of which shall be taken for these purposes to include: (a) Any relevant treaty obligations that are binding reciprocally on the parties to these agreements; (b) The provisions of any international conventions and treaties generally recognized as having codified into binding rules of customary law applicable to states and to international financial institutions, as appropriate; (c) International custom, as evidence of a practice accepted as law; and (d) General principles of law applicable to multilateral economic development activities.
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INTERNATIONAL FINANCING ON POWER PROJECTS 13.WHY NTPC IS SUPERIOR THAN OTHERS?

RELIANCE POWER 1. RELIANCE POWER & ADANI POWER as well as others domestic & foreign companies have bid for setting up a Rs 1,025-crore power transmission project connecting Tamil Nadu and Karnataka even as the central government tightened eligibility rules on 26-07-2011. Power Finance Corp is coordinating the bidding for the build-own-operate project; which involves laying two high capacity 250-km transmission lines to connect Nagapattinam with Madhugiri in Karnataka. 2. RELIANCE POWER is likely to get a loan of $625 million (Rs 2,800 crore) from US Exim Bank to fund its upcoming 2,400-MW gas-based power project in Samalkot, Andhra Pradesh on 25-07-2011. Mr. Fred P Hochberg, Chairman President of US Exim Bank told that The US Exim Bank is close to disbursing a loan of $625 million for Reliance Power plant in Samalkot. The approval should come in 4 to 6 weeks. We have already funded Reliance Power's coal-based power project in Sasan and its mining venture." This loan is a part of the $5-billion deal signed with Reliance Power for the purchase of US manufactured equipment for power projects. This loan is to be disbursed because last year Reliance Power placed a $750-million equipment contract with GE for the 2,400-MWSamalkot expansion. 3. RELIANCE POWER aims to earn Rs 5,000 crore from carbon credit from the three ultramega power projects of 4,000 MW on 12-07-2011. It seeks to earn almost Rs 2,000 crore in 10 years by registering its 4,000 MW Tilaiya ultra mega power project for carbon credits after it got two of the other mega projects registered with the Clean Development Mechanism Executive Board (CDM-EB) of United Nations Framework Convention on Climate Change (UNFCCC). 4. The Madhya Pradesh government has asked RELIANCE POWER to sign the power purchase agreement (PPA) for the 3,960-MW Chitrangi power project by the end of July month.
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TATA POWER VS. RELIANCE POWER ON 14-07-2011 The Supreme Court on Wednesday admitted Tata group's plea against the government's decision to allow RELIANCE POWER to use coal mined from blocks allotted to Sasan Power for other projects, but the ADAG Company said it is going ahead with implementation of its projects as per schedule. A bench of Justice admitted the petition of Tata group company Tata Power and posted the matter for hearing in February next year. Tata Power has challenged the Centre's decision to allow Reliance Power to use coal minded from blocks allotted to the Rs 20,000-crore Sasan Power Project for other power projects. Tata Power has challenged the decision by the Empowered Group of Ministers to allow Reliance Power to use excess coal from the captive mines meant for the Sasan project in Madhya Pradesh for another 4,000 MW project at Chitrangi in the same state. However, Tata Power had refuted these allegations in its rejoinder and submitted that bidding process for Sasan UMPP was never meant or intended to vest the successful bidder to extra coal supply of 9 million ton per annum, which could be used for developing other power projects. ADANI POWER 1. ADANI POWER may look at bidding for UMPP with capacity 4000 MW on 18-07-2011. Adani with its subsidiaries having combine capacity 16,500 MW in the coming year. "The company is in advanced stages of implementing 4,620 MW coal-based power project at Mundra in Gujarat, 3,300 MW coal- based power project at Tiroda in Maharashtra and 1,320 MW coal-based power project at Kawai in Rajasthan". Adani Power posted a total income of Rs 2,125.07 crore, including Rs 2,106.43 crore from sale of power. The entity raked in a profit after tax of Rs 523.75 crore last fiscal. 2. ADANI POWER will merge group firm Grow more Trade and Investment Private Ltd, Mauritius with itself, the company said on 7-7-2011, in a stock deal worth 23.6 billion rupees ($531 million).
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The Merger would be at a share swap ratio of 16,615 shares of Adani Power of 10 rupees each for every 10,000 ordinary shares of $1 each of Grow more. A total of 213.2 million shares of Adani will be issued to Grow more as a result of this swap deal. NTPC 1. State-run power major NTPC's trading arm NTPC Vidyut Vypar Nigam Ltd. (NVVN) has been given the mandate to export 250 MW of power from NTPC to Bangladesh on 18-07-2011. NVVN has signed the power purchase agreement with the Bangladesh Power Development Board (BPDB). The transmission lines between India and Bangladesh are being set up under a pact signed between Power Grid Corporation of India Ltd and BPDB in July last year. The links are expected to be in place by early 2013 and are being executed at a cost of around USD 190 million. The interconnection between India and Bangladesh is being established through a 500-MW HVDC (high voltage direct current) link between India's eastern region and the western grid of Bangladesh. 2. NTPC will make a final offer for a stake in Australia's Bandanna Energy Ltd on 13-07-2011. NTPC has cut its generation capacity target to 70,000-mw by March 2017 from 75,000-mw earlier, due to coal, gas supply and land acquisition issues. 3. Coal supply shortages and environmental hurdles may force state-run NTPC to scale down its target for ramping up power generation capacity to 75,000 MW by 2017 to 70,000 MW. "We would be able to do about 70,000 MW by 2017, remaining 5,000 MW looks difficult due to coal shortage and environment issues" on 13-07-2011. The company, which requires huge funding for its upcoming and expansion projects, recently signed a Rs 10,000 crore (over USD 2 billion) loan agreement with State Bank of India for financing its projects.
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4. State-run NTPC has raised USD 500 million through an international bond issue that attracted commitments worth USD 2.7 billion from foreign investors. The latest fund raising from NTPC also indicates revival in overseas bond market and could also encourage more Indian entities to tap the route on 10-07-2011. NTPC's bond issue elicited response from more than 230 investors, who made commitments to the tune of USD 2.7 billion. NTPC's upcoming projects include 1,320 MW Sholapur plant and 4,000 MW mega thermal power plants in Kudgi, Karnataka. The entity plans to add 1, 28,000 MW capacity by 2032. In recent times, European debt woes and concerns about health of global economy have cast a shadow on fund raising activities in international markets. The bond sale was part of the company's USD 1 billion Medium Term Note (MTN) programme. These bonds have a coupon of 5.625 per cent per annum payable semi-annually and are due for maturity on July 14, 2021. Book runners for the USD 500 million bond issue were Barclays Capital, Citigroup, Deutsche Bank and The Royal Bank of Scotland.
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INTERNATIONAL FINANCING ON POWER PROJECTS 14.REGULATORY FRAMEWORK FOR INTERNATIONAL FINANCE

14.1 EXTERNAL COMMERCIAL BORROWINGS (ECB)
External Commercial Borrowings availed of by residents are governed by clause (d) of subsection 3 of section 6 of the Foreign Exchange Management Act, 1999 read with Notification No. FEMA 3/ 2000-RB. Foreign Exchange Management Regulations, 2000, dated May 3, 2000, as amended from time to time.
At present, Indian companies are allowed to access funds from abroad in the following methods:
(a) External Commercial Borrowings (ECB) refer to commercial loans in the form of bank loans, buyers credit, suppliers credit, securitized instruments (e.g. floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares) availed of from non-resident lenders with a minimum average maturity of 3 years.
(b) Foreign Currency Convertible Bonds (FCCBs) mean a bond issued by an Indian company expressed in foreign currency, and the principal and interest in respect of which is payable in foreign currency.
(c) Foreign Currency Exchangeable Bond (FCEB) means a bond expressed in foreign currency, the principal and interest in respect of which is payable in foreign currency, issued by an Issuing Company and subscribed to by a person who is a resident outside India, in foreign currency and exchangeable into equity share of another company, to be called the Offered Company, in any manner, either wholly, or partly or on the basis of any equity related warrants attached to debt instruments.
ECB can be accessed under two routes:(i) Automatic Route (ii) Approval Route
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14.1.1 AUTOMATIC ROUTE
The following types of proposals for ECBs are covered under the Automatic Route:-
i) Eligible Borrowers (a) Corporates and Infrastructure Finance Companies (IFCs) except financial intermediaries, such as banks, financial institutions (FIs), and Non-Banking Financial Companies (NBFCs) are eligible to raise ECB. Individuals, Trusts and Non-Profit making organizations are not eligible to raise ECB.
(b) Units in Special Economic Zones (SEZ) are allowed to raise ECB for their own requirement.
(c) Non-Government Organizations (NGOs) engaged in micro finance activities are eligible to avail of ECB. Such NGOs should have a satisfactory borrowing relationship for at least 3 years with a scheduled commercial bank authorized to deal in foreign exchange in India.
ii) Recognized Lenders Borrowers can raise ECB from internationally recognized sources such as (i) international banks, (ii) international capital markets, (iii) multilateral financial institutions (such as IFC, ADB, etc.) / regional financial institutions and Government owned development financial institutions, (iv) export credit agencies, (v) suppliers of equipments, (vi) foreign collaborators and (vii) foreign equity holders (Overseas Corporate Bodies (OCBs)). A "foreign equity holder" to be eligible as recognized lender under the automatic route would require minimum holding of paid-up equity in the borrower company as set out below:
(a) For ECB up to USD 5 million - minimum paid-up equity of 25 percent held directly by the lender.
(b) For ECB more than USD 5 million - minimum paid-up equity of 25 percent held directly by the lender and debt-equity ratio not exceeding 4:1.
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iii) Amount and Maturity
a) The maximum amount of ECB which can be raised by a corporate is USD 500 million or its equivalent during a financial year.
b) Corporates are allowed to avail of ECB up to USD 100 million or its equivalent in a financial year for meeting foreign currency and/ or Rupee capital expenditure for permissible end-uses.
c) ECB up to USD 20 million or its equivalent in a financial year with minimum average maturity of three years.
d) ECB above USD 20 million or equivalent and up to USD 500 million or its equivalent with a minimum average maturity of five years.
iv)All-in-cost ceilings
All-in-cost includes rate of interest, other fees and expenses in foreign currency except commitment fee, pre-payment fee, and fees payable in Indian Rupees. The payment of withholding tax in Indian Rupees is excluded for calculating the all-in-cost. The all-in-cost ceilings for ECB are reviewed from time to time.
The following ceilings are valid until reviewed: Average Maturity Period Three years and up to five years More than five years All-in-cost Ceilings over 6 month LIBOR* 300 basis points 500 basis points
In the case of fixed rate loans, the swap cost plus margin should be the equivalent of the floating rate plus the applicable margin.
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v) End-use a) ECB can be raised for investment (such as import of capital goods new projects, modernization/expansion of existing production units) in real sector - industrial sector including small and medium enterprises (SME), infrastructure sector in India.
b) Overseas direct investment in Joint Ventures (JV)/ Wholly Owned Subsidiaries (WOS) subject to the existing guidelines on Indian Direct Investment in JV/ WOS abroad.
c) Utilization of ECB proceeds is permitted for first stage acquisition of shares in the disinvestment process and also in the mandatory second stage offer to the public under the Governments disinvestment program of PSU shares.
d) Infrastructure Finance Companies (IFCs) i.e. Non-Banking Financial Companies (NBFCs) categorized as IFCs by the Reserve Bank are permitted to avail of ECBs, including the outstanding ECBs, up to 50 per cent of their owned funds, for on-lending to the infrastructure sector as defined under the ECB policy.
vi)End-uses not permitted
(a) For on-lending or investment in capital market or acquiring a company in India by a corporate (investment in Special Purpose Vehicles (SPVs), Money Market Mutual Funds (MMMFs), etc., are also considered as investment in capital markets).
(b) For real estate sector.
(c) For working capital, general corporate purpose and repayment of existing Rupee loans.
vii) Guarantees
Issuance of guarantee, standby letter of credit or letter of comfort by banks, Financial Institutions and Non-Banking Financial Companies (NBFCs) from India relating to ECB is not permitted.
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viii) Security The choice of security to be provided to the lender/supplier is left to the borrower. However, creation of charge over immoveable assets and financial securities, such as shares, in favour of the overseas lender is subject to Regulation 8 of Notification No. FEMA 21/RB-2000 dated May 3, 2000 and Regulation 3 of Notification No. FEMA 20/RB-2000 dated May 3, 2000, respectively, as amended from time to time. AD Category - I banks have been delegated powers to convey no objection under the Foreign Exchange Management Act (FEMA), 1999 for creation of charge on immovable assets, financial securities and issue of corporate or personal guarantees in favour of overseas lender / security trustee, to secure the ECB to be raised by the borrower.
ix) Parking of ECB proceeds Borrowers are permitted to either keep ECB proceeds abroad or to remit these funds to India, pending utilization for permissible end-uses.
x) Prepayment
Prepayment of ECB up to USD 500 million may be allowed by AD banks without prior approval of Reserve Bank subject to compliance with the stipulated minimum average maturity period as applicable to the loan.
xi) Refinancing of an existing ECB
The existing ECB may be refinanced by raising a fresh ECB subject to the condition that the fresh ECB is raised at a lower all-in-cost and the outstanding maturity of the original ECB is maintained.
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xii) Debt Servicing
The designated AD bank has the general permission to make remittances of installments of principal, interest and other charges in conformity with the ECB guidelines issued by Government / Reserve Bank of India from time to time.
xiii) Procedure
Borrowers may enter into loan agreement complying with the ECB guidelines with recognized lender for raising ECB under Automatic Route without the prior approval of the Reserve Bank. The borrower must obtain a Loan Registration Number (LRN) from the Reserve Bank of India before drawing down the ECB.
14.1.2 APPROVAL ROUTE i) Eligible Borrowers
The following types of proposals for ECB are covered under the Approval Route:-
a) ECB with minimum average maturity of 5 years by Non-Banking Financial Companies (NBFCs) from multilateral financial institutions, reputable regional financial institutions, official export credit agencies and international banks to finance import of infrastructure equipment for leasing to infrastructure projects.
b) Infrastructure Finance Companies (IFCs) i.e. Non-Banking Financial Companies (NBFCs), categorized as IFCs, by the Reserve Bank, are permitted to avail of ECBs, including the outstanding ECBs, beyond 50 per cent of their owned funds, for on-lending to the infrastructure sector as defined under the ECB policy.
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c) Special Purpose Vehicles, or any other entity notified by the Reserve Bank, set up to finance infrastructure companies / projects exclusively, will be treated as Financial Institutions and ECB by such entities will be considered under the Approval Route.
ii) Recognized Lenders: - Same as Automatic Route for Infrastructure (Power) projects.
iii) Amount and Maturity
Corporates can avail of ECB of an additional amount of USD 250 million with average maturity of more than 10 years under the approval route, over and above the existing limit of USD 500 million under the automatic route, during a financial year.
iv)All-in-cost ceilings: - Same as Automatic Route for Infrastructure (Power) projects.
v) End-use:- Same as Automatic Route for Infrastructure (Power) projects.
vi)End-uses not permitted: - Same as Automatic Route for Infrastructure (Power) projects.
vii) Guarantee: - Same as Automatic Route for Infrastructure (Power) projects.
viii) Security: - Same as Automatic Route for Infrastructure (Power) projects.
ix) Parking of ECB proceeds: - Same as Automatic Route for Infrastructure (Power) projects.
x) Prepayment
Pre-payment of ECB for amounts exceeding USD 500 million would be considered by the Reserve Bank under the Approval Route.
xi) Refinancing of an existing ECB: - Same as Automatic Route for Infrastructure (Power) projects.
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xii) Debt Servicing: - Same as Automatic Route for Infrastructure (Power) projects.
xiii) Procedure Applicants are required to submit an application in form ECB through designated AD bank to the Chief General Manager-in-Charge, Foreign Exchange Department, Reserve Bank of India, Central Office, External Commercial Borrowings Division, Mumbai 400 001, along with necessary documents. 14.1.3 TAKE-OUT FINANCE Refinancing of domestic Rupee loans with ECB is not permitted. Accordingly, take-out financing arrangement through ECB, under the approval route, has been permitted for refinancing of Rupee loans availed of from the domestic banks by eligible borrowers in the power sectors for the development of new projects.
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INTERNATIONAL FINANCING ON POWER PROJECTS 15. RISKS FOR THE INVESTORS
15.1 Risk mitigation Risks are perceived as high partly because projects are typically undertaken not by established utility companies with strong balance sheets but by special purpose companies executing individual projects on a build-operate-transfer or build-own-operate basis. The risks associated with the revenue stream are therefore scrutinized. Equity investors may be willing to accept higher levels of risk in return for higher expected returns on their equity, but lenders typically have a lower tolerance for risk and a greater need for risk mitigation mechanisms. Different kinds of risk 15.2 Construction risk: - Construction risk refers to unexpected developments during the construction period that lead to time and cost overruns or shortfalls in performance parameters of the completed project. High capital intensity and a relatively long construction period make project costs especially vulnerable to delays and cost overruns. As a result construction risk is generally higher in sectors such as power and lower in sectors such as telecommunications and urban services. The reputation and experience of the sponsors and the engineering, procurement, and construction (EPC) contractor is an important element in assessing construction risk. While construction risk can be shifted to some extent, it cannot be eliminated entirely, since penalties for non-performance are typically capped at certain levels and the residual risk has to be borne by investors. However, lenders would be satisfied with risk sharing that reduces project risk to a level that can be absorbed by equity investors without jeopardizing loan repayments. 15.3 Operating risk: - Operating risk is usually low for infrastructure projects and high for telecommunication sector. Operating risks are typically mitigated by entrusting operation to experienced operations and maintenance (O & M) contractors.
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One source of operating risk that is very important in the power sector is fuel supply risk. Private financing of power projects depends critically on the ability to negotiate satisfactory fuel supply agreements, with appropriate penalties payable by the fuel supplier in the event of nonperformance. Fuel supply problems are being tackled in different ways in different private sector power projects in India. 15.4 Market risk: - Nonfulfillment of demand projections is an obvious example of market risk. In certain situations investors expect the monopoly purchaser to guarantee a minimum level of purchase, thus eliminating market risk for the investor. This is typically the case when an independent power producer sells power to a monopoly distributor or a water supply project sells water in bulk to a monopoly urban water distributing company. Investors are expected to undertake market studies and satisfy themselves that market demand projections at feasible levels would yield adequate profitability. 15.5 Interest rate risk: - Interest rate risks arise because interest rates can vary during the life of the project. They are particularly important in infrastructure projects because of the high capital intensity and long payback periods. High capital intensity implies that interest costs represent a large part of total costs; long payback periods mean that financing must be available over a long period, during which interest rates may change. One way of handling interest rate risk is to pass it on to consumers, as, for example, in arrangements in which the impacts of interest rate variations on unit costs are treated as a passthrough into the tariff. In the cost-based tariff formula used in many power projects in India, for example, interest costs are built into the tariff.
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Risk to be borne by the investor, who in turn can hedge the risk through devices such as interest caps and collars. The feasibility of this option depends on the sophistication of the relevant financial markets and the availability of hedging instruments. Typically, it is much easier to hedge interest rate risks in international markets than in domestic markets. 15.6 Foreign exchange risk: - Two types of foreign exchange risk need to be distinguished. One relates to exchange convertibility, the assurance that revenues generated in domestic currency can be converted into foreign exchange for making payments abroad. This risk must be borne by the government through suitable convertibility guarantees. The other type of risk is exchange rate risk, the risk that exchange rate changes lead to large increases in the domestic currency costs of payments denominated in foreign currency. 15.7 Payment risk: - It becomes very important in situations in which an independent power producer has to supply electric power to a monopoly buyer, such as a public sector distributor, or a water purifying company has to supply water to a municipal distributor. Because the financial condition of public sector utilities in developing countries is often very weak, investors are naturally concerned about the risk of nonpayment for power or water delivered to the distributor when the producer has no alternative outlet for the product. The long-term solution to this problem is to improve the financial standing and creditworthiness of the utilities or to privatize distribution so that private sector suppliers can deal directly with private distribution companies or undertake distribution themselves. 15.8 Regulatory risk: - Regulatory risk arises because infrastructure projects have to interface with various regulatory authorities throughout the life of the project, making them especially vulnerable to regulatory action. Another source of regulatory risk is that environmental concerns and standards can become more stringent during the life of the project, adding to the costs of operation.
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Private investors will expect explicit assurances that cost increases imposed because of regulatory action will be reflected in a corresponding adjustment in the tariff to project profitability. 15.9 Political risk: - These risks can be partially mitigated through political risk insurance offered by multilateral organizations, such as the Multilateral Investment Guarantee Agency (MIGA), or bilateral investment protection agreements. The World Bank's new partial risk guarantee instrument, which covers debt service payments in case they are interrupted because of nonperformance of specific government obligations, is another instrument that can play a useful role in this context. 15.10 Arrangements for risk mitigation Power projects with suitable off take guarantees may have high construction risks, relatively low operational and market risks, and high payment risk. Each project has its own risk profile, and risk mitigation structures will vary depending on the specific circumstances of each project. Because of the nature of the risks and the involvement of many participants, including project sponsors, lenders, government agencies, and regulatory authorities, risk mitigation arrangements are usually complex.
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INTERNATIONAL FINANCING ON POWER PROJECTS 16.DATA ANALYSIS OF THE PROJECT

Table16.1: Opening Loan balance sheet of all banks
ACCOUNTS CLOSING OPENING DATA Loan Balance as on OPENING LOAN BALANCE LOAN CODE IBRD-3632-O ASIAN DEVEL. BANK JBIC-I (IDP-120) JBIC-II (IDP-138) JBIC-III (IDP-140) JBIC-IV (IDP-144) EUROBONDS 2011 KEXIM SWEDISH EUROBONDS 2016 ADB II Tranche A ADB II Tranche B KFW JBIC BARH NIB BTMU 2031000 2040050 2040040 2040040 2040040 2040040 2040020 2040050 2040050 2040020 2040050 2040050 2040050 2040050 2040050 2040050 ERV CODE 2031002 2040052 2040042 2040042 2040042 2040042 2040022 2040052 2040052 2040022 2040052 2040052 2040052 2040052 2040052 2040052 CURRENCY USD JPY JPY JPY JPY JPY USD USD USD USD USD USD USD USD EUR USD FC 91,636,958.87 4,267,130,741.00 15,110,368,000.00 11,894,480,000.00 24,631,749,571.00 854,649,867.00 0.00 268,389,075.65 11,884,649.13 300,000,000.00 75,000,000.00 160,713,000.00 85,714,300.00 283,610,000.00 68,563,000.00 300,000,000.00 01/04/2011
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Table16.2: Loan wise Allocation of Interest (Net Charge) as on 04/07/2011
Cumulative up to 04/07/2011 LOAN NO. CURR. Account Code 4060001 17,466,883 Project Vindyachal-II Kayamkulam EAP-Singrauli EAP-Korba EAP-Ramagundam EAP-Farakka EAP-Rihand EAP-Kahalgaon EAP-Unchahar EAP-Vindyachal-I Korba Share 0.682263 11,917,008 0.273656 4,779,917 0.011115 194,144 0.008131 142,023 0.005472 95,579 0.001875 32,750 0.002263 39,528 0.001668 29,135 0.001550 27,074 0.005490 95,893 0.006517 113,832 ADB-Unchahr-II Total ADB interest for Unchahar JBIC-I, JAPAN-Simhadri JBIC-II, JAPAN-Simhadri JBIC-III, JAPAN-Simhadri JPY JPY JPY 4060001 4,109,999 4060001 2,367,719 4060001 5,243,323 5,243,323 83 2,367,719 4,109,999 USD 4060002 9,798,267 9,798,267 113,832 95,893 27,074 29,135 39,528 32,750 95,579 142,023 194,144 4,779,917 11,917,008 17,466,883 Total Interest Withholding Tax Total
WORLD BANK-MAIN
USD

JBIC-IV, JAPAN-Simhadri JPY 4060001 170,127 Total JBIC Interest for Simhadri KEXIM - Sipat I Sipat I SWEDISH Credit Sipat II Sipat II 5.875 % Euro Bonds 2016 Project Koldam VSTPP III Unchahar III Sipat I Sipat II Barh Kahalgaon II Korba III USD Share 0.045 9,293,685 0.1945 40,169,370 0.0514 10,615,453 0.2021 41,738,970 0.2243 46,323,854 0.0517 10,677,411 0.1642 33,911,622 0.0668 13,795,958 ADB II Tranche A Project Sipat I Sipat II Kahalgaon II USD Share 0.36667 252,630 0.32286 222,446 0.31048 213,915 ADB II Tranche B USD 4060002 1,272,619 1,272,619 84 213,915 222,446 252,630 4060002 688,992 688,992 3,603,145 17,399,103 8,856,832 42,768,454 2,788,661 13,466,072 12,098,584 58,422,438 10,901,131 52,640,101 2,772,480 13,387,933 10,491,193 50,660,563 2,427,268 11,720,953 4060004 206,526,323 53,939,294 260,465,617 4060002 2,039,563 2,039,563 4060002 9,716,070 934,349 10,650,419 170,127
11,891,168
11,891,168

Project Sipat I Sipat II Kahalgaon II Share 0.1133 144,230 0.3393 431,769 0.5474 696,620 KfW Project Tanda Singrauli Anta TTPS Farakka Unchahar Rihand Vindyachal Share 0.29332 243,660 0.11806 98,076 0.32465 269,685 0.08341 69,288 0.01815 15,081 0.07712 64,063 0.06676 55,460 0.01853 15,393 JBIC Barh 4060002 (2,010,716) NIB Loan Project ANTA Sipat I Dadri- II Share 0.34522 711,181 0.38200 786,962 0.27278 561,950 BTMU 1,307,137 Project Rihand-III 0.13697 179,039 22,895 201,934 85 167,156 1,474,293 561,950 786,962 711,181 4060002 2,060,093 2,060,093 (2,010,716) 15,393 55,460 64,063 15,081 69,288 269,685 98,076 243,660 4060002 830,705 830,705 696,620 431,769 144,230

Barh-II 0.14158 Vindhyachal-IV 0.19789 Simhadri-II 0.11118 Mauda 0.41239 BTMU 1,175,527 Project Rihand-III 0.17939 Barh-II 0.31389 Vindhyachal-IV 0.17780 Simhadri-II 0.07475 Mauda 0.25417 Net Charge 262,762,631 55,203,763 317,966,394 298,779 41,420 340,199 87,876 12,182 100,059 209,005 28,974 237,979 368,987 51,153 420,140 210,880 29,234 240,114 162,964 1,338,491 539,044 68,933 607,976 145,327 18,584 163,912 258,663 33,078 291,740 185,064 23,666 208,730
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Table16.3: Weighted average of KFW Bank
WEIGHTED AVERAGE - KFW WORKINGS: Ist Interest Period
TRANCHE DATE OF DRAWL AM OUNT IN USD PROJECT ROI DATE FROM DATE UPTO NO. OF DAYS
KFW - D I
9/24/2007 9/24/2007 9/24/2007 1/8/2008 1/8/2008 1/8/2008 1/8/2008 1/8/2008 1/8/2008 3/10/2008 3/10/2008 3/10/2008 3/10/2008 3/10/2008 6/2/2008 6/2/2008 6/2/2008 6/2/2008 6/2/2008 6/2/2008 6/2/2008 6/2/2008 9/9/2008 9/9/2008 9/9/2008 9/9/2008 9/9/2008 9/9/2008 9/9/2008 9/9/2008 3/2/2009 3/2/2009 3/2/2009 3/2/2009 3/2/2009 3/2/2009 3/2/2009 8/3/2009 8/3/2009 8/3/2009 8/3/2009 1/27/2010 1/27/2010 1/27/2010 1/27/2010 1/27/2010 1/27/2010 1/27/2010
3,175,000 TANDA R&M 859,000 SINGRAULI R&M 5,966,000 ANTA R&M 3,394,272 1,218,541 2,626,418 861,298 682,784 1,216,687 4,917,388 1,190,760 1,450,630 1,525,023 916,199 2,515,989 2,199,466 2,915,527 1,387,321 575,514 957,170 1,203,922 1,245,091 3,904,541 1,239,497 2,225,269 92,112 271,507 679,261 314,603 273,210 3,481,000 1,068,000 528,000 1,031,000 1,143,000 2,568,000 181,000 1,336,000 2,948,000 7,756,000 960,000 1,381,000 561,000 5,500,000 670,000 88,000 600,000 1,200,000 TANDA R&M SINGRAULI R&M ANTA R&M TTPS R&M FARAKKA R&M RIHAND R&M TANDA R&M ANTA R&M TTPS R&M UNCHAHAR R&M RIHAND R&M TANDA R&M SINGRAULI R&M ANTA R&M TTPS R&M FARAKKA R&M RIHAND R&M UNCHAHAR R&M VINDHYACHAL R&M TANDA R&M SINGRAULI R&M ANTA R&M TTPS R&M FARAKKA R&M RIHAND R&M UNCHAHAR R&M VINDHYACHAL R&M TANDA R&M SINGRAULI R&M ANTA R&M TTPS R&M RIHAND R&M UNCHAHAR R&M VINDHYACHAL R&M TANDA R&M SINGRAULI R&M ANTA R&M TTPS R&M TANDA R&M SINGRAULI R&M ANTA R&M TTPS R&M FARAKKA R&M RIHAND R&M UNCHAHAR R&M
1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625%
4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010
9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010
167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167 167
KFW - D II
KFW - D III
KFW - D IV
KFW - D V
KFW - D VI
KFW - D VII
KFW - D IX
KFW - D IX
3/22/2010 3/22/2010 3/22/2010 3/22/2010 3/22/2010 3/22/2010 3/22/2010 3/22/2010
5,226,500 1,712,900 3,756,600 1,888,500 197,600 1,163,900 900,300 153,700
TANDA R&M SINGRAULI R&M ANTA R&M TTPS R&M FARAKKA R&M RIHAND R&M UNCHAHAR R&M VINDHYACHAL R&M
1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625% 1.0625%
4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010 4/1/2010
9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010 9/14/2010
167 167 167 167 167 167 167 167
100,000,000 TOTAL
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IInd Interest Period
ROI Outstanding DATE FROM DATE UPTO NO. OF DAYS ROI
IIIrd Interest Period

Outstanding DATE FROM DATE UPTO NO. OF DAYS
1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250%
2,948,214 797,643 5,539,857 3,151,824 1,131,502 2,438,817 799,777 634,014 1,129,781 4,566,146 1,105,706 1,347,014 1,416,093 850,756 2,336,276 2,042,361 2,707,275 1,288,227 534,406 888,801 1,117,928 1,156,156 3,625,645 1,150,962 2,066,321 85,533 252,114 630,742 292,131 253,695 3,232,357 991,714 490,286 957,357 1,061,357 2,384,571 168,071 1,240,571 2,737,429 7,202,000 891,429 1,282,357 520,929 5,107,143 622,143 81,714 557,143 1,114,286
9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010
3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011
181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181 181
1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250%
2,721,429 736,286 5,113,714 2,909,376 1,044,464 2,251,215 738,255 585,243 1,042,875 4,214,904 1,020,651 1,243,397 1,307,163 785,313 2,156,562 1,885,257 2,499,023 1,189,132 493,298 820,431 1,031,933 1,067,221 3,346,749 1,062,426 1,907,373 78,953 232,720 582,224 269,660 234,180 2,983,714 915,429 452,571 883,714 979,714 2,201,143 155,143 1,145,143 2,526,857 6,648,000 822,857 1,183,714 480,857 4,714,286 574,286 75,429 514,286 1,028,571
3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011
3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011
17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17 17
1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250%
4,853,179 1,590,550 3,488,271 1,753,607 183,486 1,080,764 835,993 142,726
9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010 9/15/2010
3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011 3/14/2011
181 181 181 181 181 181 181 181
1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250% 1.1250%
4,479,857 1,468,200 3,219,943 1,618,714 169,371 997,629 771,686 131,759
3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011 3/15/2011
3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011 3/31/2011
17 17 17 17 17 17 17 17
92,857,150
85,714,300
88

Table16.4: Guarantee fee payable on IBRD for the period 01/04/2011 to 04/07/2011
Table16.5: Guarantee fee of World Bank allocated on different projects
89

Table16.6: Foreign Exchange Rate Variation (FERV) of KFW Bank on different projects
90

Table16.7: Interest allocation of KFW Bank on different projects
91
92
93
94

Table16.8: Differential Interest of all banks
95
96
INTERNATIONAL FINANCING ON POWER PROJECTS 17.CONCLUSION

International financing takes place on the basis of competitive bidding process. NTPC sets a competitive bidding panel. In this panel all the multinational development banks comes to the panel set. NTPC sends request for proposal (RFP) or request for qualification (RFQ) letter to all banks of that panel set. The banks read that RFP/RFQ letter then they come to the panel set for competitive bidding. RFP/RFQ letter include all the terms and condition for investment. Each multinational development bank has different code for bidding, different loan code, and different account code. At last who has lowest bid price wins the bidding process for investment. After the end of bidding process, NTPC directly consults to that bank (winner) for investment. NTPC checks its own balance sheet to know which subsidiary requires financing. The loan amount which is in foreign currency is converted in local currency (INR) by Indian commercial banks (State Bank of India, State Bank of Hyderabad etc.). Selection of Indian commercial banks on the basis of competitive bidding process.
18.RECOMMENDATION & SUGGESTION

The Employee turnover is quite high. Many productive man hours are wasted in order to get the new employee get accustomed to the working environment of the organization. The company can look at the root cause of this issue and try to reduce their employee turnover. No doubt that retaining the talent is not an easy task for the public sector companies but a little appreciation and remuneration can really boost the morale of the employees.
97
INTERNATIONAL FINANCING ON POWER PROJECTS 19.BIBILIOGRAPHY

(1) www.ntpc.co.in (2) Fore closing of coal & international finance-www.iea.com (3) Position paper- power (4) Financial management-I M PANDEY (5) Financial management-M Y KHAN (6) International financial management-V SHARAN (7)World Bank lending instruments (8) General Conditions Applicable to the African Development Bank Loan Agreements and Guarantee Agreements (9) CPA REVIEWS NOTES- INTERNATIONAL FINANCE (10) Indian power sector news July 2011 (11) ECB GUIDELINES-RBI (12) Financing Private Infrastructure: Lessons from India- Montek S. Ahluwalia (13) www.cercind.gov.in (14) www.cea.nic.in (15) www.iea.org (16)www.powermin.nic.in (17)www.crisil.com (18)www.moneycontrol.com
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INTERNATIONAL FINANCING ON POWER PROJECTS

SUMMER TRAINING REPORT On International Financing On Power Projects at

Sector-33, Faridabad-121003, Haryana

Maharishi Dayanand University, Rohtak

INTERNATIONAL FINANCING ON POWER PROJECTS DECLARATION

Any other degree.

Suggestions as approved by the faculty were duly incorporated.

Counter signed:(Director/ Principle of the institution)

INTERNATIONAL FINANCING ON POWER PROJECTS CERTIFICATE

Date: August- 05- 2011

Shri K. Sreekant Additional General Manager (IF) NTPC Ltd.

INTERNATIONAL FINANCING ON POWER PROJECTS ACKNOWLEDGEMENT

INTERNATIONAL FINANCING ON POWER PROJECTS ABBREVIATIONS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS Table of Contents

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS 1. EXECUTIVE SUMMARY

INTERNATIONAL FINANCING ON POWER PROJECTS 2. ORGANIZATION PROFILE

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

Mar '10 12 mths

Mar '09 12 mths

Mar '08 12 mths

Mar '07 12 mths

INTERNATIONAL FINANCING ON POWER PROJECTS

Weaknesses: High employee turnover. Still some departments work in isolation.

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS 3. OBJECTIVE OF THE PROJECT

INTERNATIONAL FINANCING ON POWER PROJECTS 4. SIGNIFICANCE OF THE PROJECT

5. SCOPE OF THE PROJECT

INTERNATIONAL FINANCING ON POWER PROJECTS 6. RESEARCH METHODOLOGY OF THE PROJECT

INTERNATIONAL FINANCING ON POWER PROJECTS 7. INTRODUCTION

INTERNATIONAL FINANCING ON POWER PROJECTS

Figure7.1: XIth plan Capacity Addition Targets & Achievement

INTERNATIONAL FINANCING ON POWER PROJECTS

Figure7.3: Capacity Addition Private Sector

INTERNATIONAL FINANCING ON POWER PROJECTS

Figure7.4: Investment in Power Sector

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS 8. KEY TERM OF INTERNATIONAL FINANCE

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS 10.ROLE OF WORLD BANK, ADB, IFC

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

The ADB: 1. Makes loan and equity investments;

INTERNATIONAL FINANCING ON POWER PROJECTS

IFC (INTRENATIONAL FINANCE CORPORATION)

This means that the Board of Governor is the apex body.

INTERNATIONAL FINANCING ON POWER PROJECTS

IFC provides loans and makes equity and quasi-equity investment.

Unlike IBRD loans, these loans do not require government guarantee.

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS

INTERNATIONAL FINANCING ON POWER PROJECTS