NTPC Plans $1 Billion Bond Sale After India Power Crisis

Aug. 8 (Bloomberg) -- NTPC Ltd., India’s largest power producer, will announce this month a plan to sell $1 billion of bonds overseas for capacity expansion, following the nation’s worst electricity crisis last week.

The medium-term notes will help finance capital investments, Chairman Arup Roy Choudhury told reporters in New Delhi yesterday, without elaborating. The company has raised $800 million since 2006 by selling medium-term notes.

A blackout across the north and east of India last week left more than 640 million people without electricity, halted trains and caused traffic jams. Shortages of coal and natural gas have stalled power projects, making lenders cautious, according to Ashok Khurana, director general at the Association of Power Producers.

About 70 percent of NTPC’s planned investments will be funded through debt, Choudhury said. While the company aims to increase its generation capacity by 30 percent to 51,052 megawatts by March 2017, the utility has yet to start building projects with almost 11,000 megawatts of capacity because of a lack of assured coal supplies, he said.

NTPC will also develop coal mines in the country to produce 37 million metric tons of the fuel annually by the year ending March 31, 2017, Choudhury said. The company will buy all the 164 million tons of coal needed to fire its plants in this fiscal year.

The utility raised $500 million selling 5.625 percent dollar-denominated notes at 255 basis points more than U.S. Treasuries in July 2011, according to data compiled by Bloomberg. The yield on the notes fell one basis point to 5.22 percent today, according to Royal Bank of Scotland Group Plc prices.

NTPC shares rose 0.8 percent to 168.65 rupees at 10:44 a.m. in Mumbai. The stock has gained 4.8 percent this year, compared with a 14 percent increase in the benchmark Sensitive Index.

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net