HSBC has closed a landmark power deal in India that bankers working on the transaction believe is the biggest financing this year for the Indian power sector, as well as the biggest Indian deal for Korea Ex-Im Bank.

Undertaken on a pure corporate risk basis without any guarantees, the deal involving HSBC and fellow lead arranger BNP-Paribas is for National Thermal Power Corp (NTPC), until recently a wholly state-owned utility.

Both commercial banks have funded 25% each of a US$354.25mn financing element for NTPC to purchase super-critical boilers from Korea’s Doosan. The Export-Import Bank of Korea (Kexim) has funded the rest.

The tenor is 16 years door-to-door. There is a fixed interest rate in cooperation with Kexim, although no details are available.

The project that this financing relates to is a 3 x 660MW US$2bn coal-fired super-critical thermal plant in Sipat in the state of Chhattisgarh. Super-critical thermal generation refers to the boiler pressure, which creates a more efficient rate of heat transfer and lower emissions.

NTPC is responsible for all thermal power generation in India. It is the sixth biggest generator in the world and the second for utilisation of installed capacity. It plans to increase installed generation capacity by 9,370MW by 2007 in its 10th plan. The firm underwent a domestic IPO recently, selling 10.5% of the company’s equity, following years of state control.

Associate director within HSBC’s project and export finance team, responsible for the deal, Alex Taylor, comments: “This is the first export credit that NTPC has done on a pure corporate risk basis. Other public sector companies are looking to follow suit. For instance, NTPC’s sister company, NHPC, the hydro-electric firm, is planning to come to market. Both ourselves and BNP-Paribas have been mandated to look into further export financings for NTPC.”