Jan. 4 (Bloomberg) -- Lanco Infratech Ltd., an Indian energy and infrastructure company, plans to borrow from Chinese banks, joining rivals in seeking cheaper funds for equipment contracts for plants in the South Asian nation.
Lanco placed an order with Dongfang Electric Corp. and is negotiating a contract with the banks, which could take as long as a year to complete, S.C. Manocha, chief executive officer for the company’s engineering, procurement and construction business, said by telephone today from Gurgaon, near New Delhi. He declined to give details.
Reliance Power Ltd., controlled by billionaire Anil Ambani, got funds from lenders in China last year after rupee borrowing costs climbed the most in four years. Utilities are setting up plants in Asia’s second-fastest growing major economy to increase generation capacity and sustain economic expansion.
“Reliance Power opened up the possibility to lower expenses with financing through China’s banks, I think you’ll see that continuing,” said Michael Parker, a senior research analyst with Sanford C. Bernstein & Co. based in Hong Kong. “The banks are showing an interest in supporting their domestic manufacturers.”
Reliance Power received loans of $1.1 billion from a group of Chinese banks to fund a 3,960 megawatt project in Madhya Pradesh state, the company said in a statement Dec. 15. Lanco’s borrowing plan is for an order for 10,560 megawatts of equipment, Manocha said.
Lanco has plants with a capacity of 2,092 megawatts, according to the company website. It is building 7,148 megawatts and plans to develop an additional 11,070 megawatts.
SRM Energy, Adani
SRM Energy Ltd., part of India’s Spice Energy Group, will borrow $1.2 billion from the Industrial & Commercial Bank of China Ltd. to fund its orders, Chief Executive Officer D. Sundararajan said today by telephone from Mumbai. He said the loan may be decided by early March.
SRM Energy is developing a 1,980 megawatt thermal power plant in Cuddalore in India’s southern Tamil Nadu state, according to its website. The company plans projects in Maharashtra state and east India.
Adani Power Ltd., which agreed to order 7,260 megawatts of equipment from China’s Sepco Electric Power Construction Corp., is preparing a financing plan.
“External commercial borrowing is becoming an important source for infrastructure growth,” Adani Power’s Executive Director Ameet Desai said by telephone today from Ahmedabad, declining to say if the company is seeking a loan from China.
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