We provide funding towards setting up/implementation of Conventional Power Generation Projects viz.  Thermal Power Projects, Hydro Electric Power Projects, Nuclear Power Projects etc.

Eligible Entities

State Sector GENCOs/Integrated SEBs/Combined Generation & Distribution Companies, Power Dept., CPSUs, JVs/SPVs of State sector utilities/CPSUs, etc.

Categories of projects considered under Conventional Generation in State Sector

• New Conventional Generation projects: - Projects for setting up/implementation of new conventional generation projects/units, expansion projects, replacement projects being undertaken for setting up of new units in place of existing units.
• Pollution Control Equipment installation schemes: - Projects for funding Capex Requirement for installation of pollution control equipment (FGD, SNCR, SCR, ESP etc.).
• Renovation & Modernization (R&M) Works: - Projects undertaken to make generating units equipped with modified/augmented latest technology equipment/components/systems/smooth operation of power plant(s) with a view to improve their performance in terms of output/ reliability/availability, reduction in maintenance requirements, ease of maintenance and enhanced efficiency, increase in project life, uprating of the power plant/unit. Further, the works related to integration of high level of renewable capacity in the power system requiring flexibilisation of the existing generating units (i.e. lowering the minimum load, adopting high ramp rate etc.) to balance the variability and intermittency of renewable generation may also be considered.

Extent of Funding

REC may generally take exposure of up to 70-80% of the project cost in state sector projects. For state sector projects, loans can be extended up to the permitted exposure limits for the respective borrowers as per grade/category (A++, A+, A, B, C) ascertained by REC. The overall exposure is further limited as per RBI’s credit concentration norms applicable for state sector borrowers of REC.

Fees

State sector utilities (GENCOs/Integrated SEBs/Power Departments), Central Sector Utilities, CPSUs and JVs//SPVs of State sector utilities/ CPSUs etc. are not required to pay any processing fees, upfront fees and commitment charges.

Interest Rate

The rate of interest for any project/scheme shall be as applicable for the respective utility as per the latest REC grading of the utility and REC loan policy circular.

Moratorium & Repayment Period

Moratorium

The Moratorium period for principal repayment shall be six months after the Scheduled COD subject to a maximum of 5 years from the date of first disbursement for all type of generation projects. There will not be any moratorium for payment of interest.

Repayment Period

The repayment period (in addition to moratorium period) for hydro projects may be up to 18 years. Thermal generation projects will have a repayment of 15 years and 12 years for loans towards Pollution Control Equipment (FGD etc.), R&M and other capital expenditure projects.

Higher moratorium and/or repayment period may be considered in some cases based on merits of the case and with approval of REC’s competent Authority.

Loan Availability Period

Disbursements can be made against cost incurred during the implementation period of the project. However, claims can be submitted by the utility up to 6 months from the SCOD or as agreed by REC.

Security

The Term Loans together with interest, costs, expenses and all other monies whatsoever accruing out of the term loan can be secured by any of the following:

• Unconditional and irrevocable Guarantee from the State Government for the repayment of loan, payment of interest/service charges thereon, additional interest, if any, and costs, charges, expenses, losses, applicable taxes, statutory duties and other money

• Charge on Assets i.e. Hypothecation by way of first charge on all existing and future movables assets of the Project AND Mortgage by way of first charge on all immovable properties i.e. Land together with buildings and other civil works attached thereto of the project.

• Charge on existing assets of the state utility.

• Corporate guarantee

• Any other guarantee/security acceptable to the Corporation

Payment security Mechanism

• Escrow arrangement;

• Trust & Retention Account (TRA) mechanism;

REC may also stipulate additional payment security mechanism on case to case basis like Tripartite Agreement (TPA) among State Govt., Reserve Bank of India (RBI) and Ministry of Power (MOP) w.r.t. loans to the State Power Utilities etc.

Other covenants

Assignment of all project contracts, documents, insurance policies in favor of Corporation.