The 250 mw Neyveli power project in Tamil Nadu, promoted by ST-CMS Electric Power Company, achieved financial closure on Wednesday. The deal includes external debt raised by a consortium of bankers, including ICICI and State Bank of India.
The total foreign debt in the project amounts to DM 182 million, while the foreign equity works out to DM 164.7 million. The project is expected to be commissioned by 2003. The consortium of banks also includes Bank of America, ANZ Grindlays and Export Finance Ltd.
The power company is a joint venture between the US-based utility group CMS Energy Corporation and equipment major Asea Brown Boveri (ABB). Both will hold 50 per cent stake in the project. It is among the seven fast track power projects that had been initiated some years back.
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Under the current counter-guarantees for fast track projects, the Centre gives cover only on the foreign debt on the termination of the contract. The finance ministry gave its consent to the counter guarantee, and after the company submitted the due documents to the power ministry, the project was kicked off.
The power company is raising funds on a non-recourse basis. The deal has been financed by the company by mortgaging some securities and against future cash flows. Accordingly, the company has also signed an escrow contract with the state government.
Although the Centre has so far signed the counter-guarantee with the promoters of three fast track power projects, only the ST-CMS power project has achieved financial closure.
The Hinduja-National Power-promoted fast track power project is not even near closure, since lenders to the project have stipulated some conditions on the counter-guarantee. Although the government has accepted some of the conditions with respect to the recitals, it has not accepted the other conditions.
The promoters have also not yet signed the escrow agreement with the Andhra Pradesh government.
The Ispat group, promoters of the Bhadrawati power project, on the other hand, have to completely re-work their agreements with the state as the coal mining project has been taken over by Western Coal Fields.