NTPC raises Samurai loan worth $750 million for new projects; It is Asia's largest Japanese yen loan

NTPC, India's largest power generator, on Monday said that it has raised syndicated Japanese Yen loan (JPY) worth $750 million (around Rs5,367 crore). The raised fund will be used to reduce air pollution in power projects across the country.

In the process, the state-owned power giant will fund the installation of the Flue Gas Desulphurization (FGD) system, new hydro projects and projects using ultra-supercritical technology.

Need for reducing Emissions

The ministry of environment and forests (MoEF) had earlier placed the emission norms for sulphur oxides (SOx) under which all thermal power projects will have to install FGD systems. FDG systems would help the power giant to bring about the substantial reduction in toxic sulphur oxide emissions.

Ultra-supercritical technology is used by plants that require less coal per megawatt-hour, which lead to lower carbon emissions.

The company has said that this is the largest ever Samurai loan (syndicated JPY loan) raised by any Asian company. It is also the highest ever single currency loan raised by NTPC.

Finance Minister Nirmala Sitharaman earlier on Saturday in her Budget speech said that utilities running thermal power plants with high carbon emission levels are advised to close those plants with emissions above pre-set norms.

Raised under automatic route of RBI ECB regulations, the loan has been fully underwritten by State Bank of India, Tokyo, Sumitomo Mitsui Banking Corporation, Singapore and Bank of India, Tokyo. The facility has a door to door maturity of 11 years under two tranches.

About Samurai Loans

Samurai loans allow non-Japanese firms to tap into the investment capital available in Japan and borrow funds in Yen. The facility is among the currencies with the lowest interest rates. Cross border syndicated loans provide the borrower with capital to either enter the Japanese market or the ability to convert the proceeds into the firm's local currency for use of existing operations.

"In an endeavour towards a sustainable and cleaner environment, NTPC would utilise these loan proceeds to fund CapEx for installation of Flue Gas Desulphurization (FGD) system that helps in a substantial reduction of SOx emission, new hydro projects and projects using ultra-supercritical technology with low carbon emission," stated NTPC in a release.