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Tuesday Dec 05 2000 | Updated 0011 hrs IST 1341 EST
Maheshwar project attains financial closure


NEW DELHI
S KUMARS' promoted Rs 1,881 crore Maheshwar hydel power project in Madhya Pradesh has managed to attain financial closure with a debt-equity ratio of 2.23:1.

The 400-mw project would have a Rs 1,298 crore debt component while the remaining Rs 1,881 crore would come by way of equity, highly placed company sources said.

The project would be financed by the consortium of Industrial Finance Corporation of India, Industrial Development Bank of India, State Bank of India, Power Finance Corporation, Bank of India, Bank of Baroda, Punjab National Bank and Central Bank of India through a mix of rupee term loans, foreign currency loans and guarantees, they said.

While S Kumars have already infused their equity contribution, its 51:49 joint venture partner Ogden Energy of the US would be chipping in as and when required, sources said adding the project was slated for completion by 2002.

A leading German bank has provided a 17-year loan to the project towards equipment being supplied from Europe, sources said adding ABB, Portugal, is the hydro mechanical equipment supplier while Siemens of Germany would be supplying electrical mechanical equipment. Contract for civil work has been awarded to Sew Construction and Prasad, Hyderabad.

The power purchase agreement with Madhya Pradesh Electricity Board, concluded in 1996, covers sale of energy for a period of 35 years, extendible by a further 20 years, sources said adding tariff for power generated would cover 100 per cent of the project's debt obligations and ensure a basic 16 per cent return on equity.

The Maheshwar project has a three-tier security structure with MPEB establishing a letter of credit for an amount of 1.5 times the average estimated monthly billing, which would be reinstated 15 days after call, sources said.

The project is the only independent power producer in Madhya Pradesh to have signed an escrow agreement with the allocation of four regional accounts offices' revenues from Ratlam, Mandsaur, Bilaspur and Ambikapur, they said adding operational escrow agreement was now being finalised with the SEB.

Besides, the Madhya Pradesh government has provided a guarantee for all the revenues receivable by the project. The state government has also signed an implementation agreement that binds it to smooth project implementation.

The project would provide peaking power and shall reduce the peak power shortage of the state by almost 25 per cent, sources said adding the project has a benefit-cost ratio of 1.37.

Maheshwar hydroelectric project is a 'run-of-the-river' scheme which means it would utilise the natural flow of the river to generate 400 mw of peaking power.

It involves building of a 3,420 meter long and 36 meter high composite dam. At the foot of the barrage a powerhouse comprising 10 turbine generator sets of 40 mw each, are being constructed, they added. - PTI
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