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The government is considering a proposal of the
Reliance Industries (RIL) to raise $1 billion through external commercial borrowing (ECB) to meet some of the expenses at its petrochemicals, oil & gas and refining complex.
Specifically, the company plans to meet expenses on import of services, technical knowhow and licence fees for the complex through the fund.
The fund raising plan is under consideration of a government committee headed by economic affairs Secretary Arvind Mayaram and which has representation from the RBI.
On January 3, the committee of ECB approvals had discussed RIL’s proposal. The $1 bn fund raising plan is part of the firm's larger proposal to raise $4 billion this year for importing capital goods for expansion of its petrochemicals, oil & gas exploration and refining facilities.
At that time, the committee put on hold $1 billion ECB proposal to import services, technical knowhow and licence fees even as it cleared $3.095 billion in foreign loans by to import capital goods.
If approved, RIL will be the second company to be allowed to borrow abroad for pay for import of services, technology and licence fees.
Earlier in 2008, the government allowed Gujarat State Petroleum Corporation (GSPC) to borrow abroad to pay for importing similar services. The existing ECB guidelines do not allow ‘such end-use’ of ECB funds.