The government on Tuesday approved Reliance Power's request to mortgage coal blocks attached to Sasan UMPP - ultra mega power project in Madhya Pradesh to foreign lenders of the plant that encompass banks from the US, Singapore and China, official sources said.
Earlier, the coal ministry had rejected the proposal in a letter dated 10th May to the company and Madhya Pradesh government. The letter stated that the decision was based on views of the power ministry saying that there wasn’t any provision for mortgage of coal blocks in contract documents and power purchase agreement for the project.
Sources said that the matter was referred to an inter-ministerial committee upon the power ministry's objection stating that it never communicated any such view and the coal ministry were to decide whether the coal blocks could be counted as assets for mortgage.
Last month, the committee concluded that the mortgage will not 'vitiate' or corrupt any rules. It said that coal blocks could be counted as assets for mortgage, but the mining lease could be mortgaged. On Tuesday, Piyush Goyal - Power, Coal, Renewable Energy and Mines Minister, approved mortgage.
Meanwhile, Reliance Power share price was trading 0.66 per cent up at Rs.53 on NSE today. It opened at Rs.53.40 from a previous closing of Rs.52.65.
Reliance Power told the central government that mortgage was a prerequisite for the Rs.14,500-cr debt that the company had borrowed from a consortium of 14 banks led by the SBI - State Bank of India in April 2009. The banks that financed 75 per cent of the Rs. 19,400-cr Sasan project encompassed US Exim, China Development Bank, Bank of China and The Export Import Bank of China. The Anil-Ambani led Reliance Power has claimed that Rule 37 of Mineral Concession Rules, 1960 provides for securing scheduled banks by mortgaging mines.
For information on the support and resistance levels of the stock, please pay a visit to Reliance Power share price history.
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