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Reliance gets nod for $642-m telecom loan

This is the largest loan cleared for any infrastructure project so far with the group utilising to the full the telecom policy allowing a firm to raise half the initial project cost through ECBs. The Reliance group had already raised more than a billion dollars in 1995-96 and 1996-97.

The finance ministry has also permitted Reliance Telecom to raise a five-year loan for its basic services. The telecom industry has been seeking that the government permit them to take foreign loans for basic and cellular phone services for a shorter term than the current minimum of seven years. According to industry sources, the profits begin coming as early as the third year itself and waiting for the seventh year makes no sense to the company in debt. They also pointed out that in a fast changing industry, being burdened with a debt on an obsolete piece of technology could cripple progress.

The Union finance ministry has already cleared many other external commercial borrowings, with companies like Sterling Cellular, Sterlite Industries, IRFC and CESC getting over $50 million cleared.

The finance ministry has already cleared ECBs worth $ 1 billion in the power sector in April and May. The total ECBs sanctioned till May 23 in the current fiscal year totalled $2.4 billion.

By comparison, in 1996-97, the power sector got approvals for ECBs worth $2 billion for the telecom sector and and $1 billion for petro-refinery projects.

That already one billion dollars have been handed over to the power sectors indicates that, owing to the current power crunch, it is going to get priority in the funding game this fiscal year.

- Compiled from the Indian media

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