Financial Products

Financing of Coal Mines

Scope of Guidelines

State/Government sector project shall include the coal mines projects allotted to the following:

  • State Power Utilities
  • Central Government and its companies/PSUs
  • State Government and its companies/PSUs
  • Any other Government Agency/ Entity
  • Joint Venture between two or more Government companies
  • Joint Venture with private company with participation of Central/State company greater than or equal to 51%.
  • Any other entity as defined in State Grading Circular of REC.

Applicability of Financing Norms

  • State/Government Sector Projects - With respect to the Coal mines allocated to the State/Government sector, the applicable grading as notified in REC state grading circular (as notified by REC from time to time) may be considered; while ascertaining the final Entity Grade for the Project. However, for such projects, project appraisal guidelines shall be used to assess the viability of the project. Parameters linked to Rating such as Interest Rate, Exposure etc. may be determined on the basis of final Entity Grade only in respect of the Coal mines allocated to the State/Government Sector. Financing Norms except extent of funding, debt equity contribution, security package, and moratorium and repayment period shall be kept in harmony with the prevalent REC policies, procedures and Board approved General Terms and Conditions for Sanction of Rupee Term Loan for Generation Projects.

Extent of Funding

  • REC may take exposure of up to 100% of the debt component in coal mining projects allocated to State/Government sector. It is recommended that the extent of exposure for a particular coal mine Project shall be decided after accessing the viability of the project (Project appraisal) and applicable grading as per REC state grading circular.

Moratorium Period

  • The Moratorium period for principal repayment may be upto six months after the Scheduled Commercial Operation Date (SCOD) and maximum upto 5 years from the date of first disbursement in case of Schedule II & Schedule III mines and maximum upto 7 years from the date of first disbursement in case of Schedule I mines.
  • REC shall decide SCOD in accordance with mine plan, expected time to achieve peak capacity and post discussion with other lenders.

Principal Repayment Period

  • The coal deposit for the financing organization is the asset that secures the repayment of the loan so in any case repayment period shall not be more than lower of a) and b) below
    • 80% of remaining mine life
    • Existing maximum repayment period of term loan lenders of end use power plant.

Total Repayment Period

The total repayment period shall therefore be as follows: For Schedule II & III mines - The scheme period for all type of Projects = ((Time till Scheduled COD + upto 6 months moratorium) (total restricted to 5 years from the date of first disbursement)) + Principal Repayment Period. For Schedule I mines – The scheme period for all type of Projects = ((Time till Scheduled COD + upto 6 months moratorium) (total restricted to 7 years from the date of first disbursement)) + Principal Repayment Period. Higher moratorium period may be considered on merits of the case and with the approval from the competent authority

Interest rates and financial charges shall be as per prevailing REC policies.

 

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