A bridge loan by BSES Infrastructure Finance (BIFL) has enabled group company BSES Andhra Power (BAPL) to commission its 220 mw Samalkot power project despite financial closure not being achieved. The project was commissioned last week by Union power minister Suresh Prabhu.
BIFL gave a loan between Rs 150 crore to Rs 200 crore for the Samalkot project situated near Kakinada in Andhra Pradesh.
R V Shahi, chairman and managing director, BSES, said: " The bridge loan was availed of pending financial closure. After the project attains formal financial closure, the loan will be returned to BIFL. Availing of such a loan also helps in securing a lower interest rate from lenders as they feel that some money is already available."
The gas-based Samalkot power project has been conceived with a 70: 30 debt equity ratio. Company executives said the cost of power will be less than Rs 2 per unit. Shahi attributed this to the company being able to keep the cost of the project down. Under the independent power project policy charted out by the Union government in the nineties, private power producers are assured of a 16 per cent rate of return on equity.
BAPL and BIFL are subsidiaries of BSES. The Mumbai-based power company holds 70 per cent in the former while the latter is a wholly owned subsidiary.
BIFL was incorporated a few years back to render advisory services to group companies of BSES. It assists in lease syndication and fund management. The company provides financial and commercial inputs for the business development of BSES and its joint ventures.
BSES is primarily a power distribution company and holds the right to supply power to large parts of south Mumbai. It branched out into generation with the setting up of a 500 mw plant at Dahanu in Maharashtra to supply power to its licensed area. The company plans to add 9,000 mw of power generation capacity in the next 10 years and add six more distribution circles apart from those in Mumbai and Orissa. It is also in the fray for acquiring the 85 per cent stake of the foreign sponsors in the troubled Dabhol Power Company.
