Dabhol Power Corp has invited banks and financial institutions to fund the second phase of its project, which is projected to cost $1.5 billion and generate 1,400 megawatt.
The 690mw first phase is nearing completion, ahead of schedule. The project had been delayed after the Shiv Sena-BJP government in Maharastra cancelled the earlier contract and negotiated a fresh deal. The cost of the first phase was $1 billion.
Of the $1.5 billion second phase, $500 million has been earmarked for a regassification plant. A DPC spokesperson said the reduced cost for the second phase was due to a major fall in equipment prices. Besides, the first phase suffered a time and cost overrun due to the renegotiation. Also, since the second phase will share the same infrastructure as the first phase, no additional cost will be incurred.
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Like the first phase, the second phase too will have a debt-equity ratio of 70:30. Sources said DPC may plan to achieve financial closure by end- June. The bankers to fund the second phase are expected to be finalised by end-March.
A DPC spokesperson said, We hope to get the same banks that financed the first phase and the initial response has been very enthusiastic. DPC will, however, also invite other banks to part-finance the project. Last week, bankers were flown by helicopters to the project site to assess its progress.
IDBI and SBI are among the Indian financial intermediaries that have shown interest in the project while BankAm, Bank of Tokyo, ABN Amro and Sumitomo Bank are among the interested foreign banks. IDBI had lead managed the funding of the rupee component in the first phase and Bank of America and ABN Amro had picked up a major chunk of the foreign currency loan.
The DPC spokesperson said the exact financing plan would be put into place in about a month. This plan will decide the sources of finance in terms of loans, suppliers credit and the rupee and forex component. Bankers said the willingness of international banks to fund an exposure of such a large magnitude reinforces DPCs reputation as a good executer, despite initial setbacks, and also indicates that India is a good country risk.