DVC to raise Rs 14,000 cr for thermal projects

Damodar Valley Corporation (DVC) plans to raise Rs 14,000 crore to fund its ambitious expansion plan for 6,000 MW thermal projects over the 11th Plan period. It will invest Rs 6,000 crore from its internal accruals in the projects, DVC Chairman AK Barman has said.

The loan will be syndicated by SBI Caps, with the SBI itself putting in around Rs 1,700 crore. SBI had pledged Rs 700 crore for investment in the current year and would lend an additional Rs 1,000 crore over the next five years, SBI Caps MD R Sridharan said.

Already, around nine public sector banks and the Life Insurance Corporation of India had agreed to participate in the syndicate, Sridharan said.

Of the Rs 6,000 crore that DVC would invest towards equity in these projects, Rs 3,500 crore would come from cash and bonds on the company's books, Barman said. It would also set aside Rs 500 crore from its internal accruals every year for the next five years towards equity contribution in the projects.

DVC has three 1,000 Mw greenfield projects lined up for completion during the 11th Plan period -- at Kodarma in Jharkhand, and Durgapur and Raghunathpur in West Bengal. The projects would all be awarded by the end of 2007, he said. The company had already been allotted coal blocks for these projects.

The company also plans to expand capacity at its Mejia plant in West Bengal from 840 Mw to 1,340 Mw by the end of the current year and to 2,340 Mw by 2011.

It was also implementing a 1,000 Mw project with Tata Power at Maithon and a 500 Mw project with SAIL, as well as expanding the capacity of the power plant at Bokaro by another 500 Mw, Barman said.

DVC, which reported a net profit of Rs 1,000 crore last year, may find its bottomline taking a hit this year with the Central Electricity Regulatory Authority (CERC) cutting tariff by 60 paise per unit. The company, which currently sells power at Rs 2.85 per unit, would take a hit of Rs 500 crore to its bottomline if the CERC did not reverse its decision, Barman said.

"We have appealed to the CERC to reconsider its decision," he said. The CERC had slashed the tariff to reflect the actual cost of power generation borne by DVC.

It had also asked the company to improve its generation efficiency, raising the plant load factor from the present 40 per cent to 63 per cent in the current year.