High Interest

CEAT Kelani Holdings Managing Director Ravi Dadlani (right) and Lanka Ashok Leyland CEO Umesh Gautham exchange the OEM agreement

Oct 05, 2006 (LBO) – Sri Lankan engineering company Lanka Transformers will build a 300 megawatt power plant in Kerawalapitiya, funded through a combination of government equity and debt. The long delayed combined cycle plant, likely to cost in the region of 300 million dollars, is to be built by Lanka Transformers Ltd (LTL) subsidiary and Independent Power Producer Lakdhanavi.

“The government of Sri Lanka has agreed to put up 30 percent of the cost as equity, with the balance 70 percent to be raised through debt,” a top official with LTL, told LBO on Thursday, on condition of anonymity.

The government has agreed to guarantee the project, with debt likely to be raised through export-credit financing, for better interest rates and longer tenure, the official said.

“The government will incorporate a project company that will be responsible for arranging a debt package. We are eligible to get support from Export Credit Agencies (ECA). It is likely to be ECA kind of financing.”

Export Credit Agencies are financial institutions that provide funding through project guarantees and loans on favourable terms relative to those offered by commercial banks, to overseas markets.

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