 "CLP India pools revenues to pay off debt")
China Light and Power India today said that it has made arrangements with its banks to allow it to pool revenues from all its wind power plants. It will service its debt from the pool of revenues, as opposed to paying from project-specific earnings.
It made pooled financing arrangements with three banks--Standard Chartered Bank, IDBI Bank Limited and IDFC. This new financing structure, the company believes, will help them reduce risks that arise from unpredictable nature of the output of wind power. The revenues from wind power plants vary annually, as a few high-wind years tend to be followed those with low wind, across geographies.
The company has wind power plants with a total capacity of over 1,000 megawatts. It plans to add around 250 to 300 megawatts of wind power annually.
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“We work with this approach and look to minimize our financing costs with an objective to optimize the efficiency and performance of all our assets. With standardization of documentation as a result of this approach, we will see much quicker financial closures for our projects in the future, which will significantly enhance the overall efficiency and effectiveness of the financing process,” said Samir Ashta, Director- Finance and Chief Financial Officer, CLP India.
B K Batra, the deputy managing director of IDBI Bank, said that project specific risks are reduced with pooled arrangement, and cash-flows get evened out, thereby, making the wind projects more acceptable to the lenders.