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Coastal Energen, part of the $ 1.75 billion Coal & Oil (C&O) Group, said it was in talks with Japanese firms to support the company’s proposed expansion plan involving setting up of a new 1200-Mw power unit at Tuticorin in Tamil Nadu.
“We are talking to the government to take up the expansion (adding another 1200-Mw) in the same location.Going by the current value, to set up a one mega watt of coal-based power plant, it would cost around Rs 5 crore, which translates into around Rs 6,000 crore for the upcoming expansion,” said Ahmed Buhari, founder president & CEO of Coastal Energen.
The company is expecting to get some more funding from large infrastructure finance companies, including India Infrastructure Finance Company Limited (IIFCL) and IFCI Limited. According to Buhari, the company was planning to raise around $100 million from these institutions through external commercial borrowings (ECB).
Coastal Energen is also talking to Japanese firms, including government-run institutions, banks, large financial institutions to fund the expansion plan. “We are talking to them to fund equipment part of the expansion plan,” said Buhari.
On Friday last week, the company announced it had raised the last mile term loan and working capital worth Rs 1,950 crore from SBI and a consortium of banks to complete its ongoing 1200-Mw power plant. For the project, with an estimated investment worth around Rs 7,600 crore, the company had invested Rs 6,200 crore till December last year.
Buhari said the first unit of 600-Mw Mutiara plant went live on December 23, 2014, and has generated over one billion units till last Friday with a revenue of over Rs 500 crore ($ 81 million).
The second 600-Mw unit is expected to go on stream by the end of this year.
The company said it had consumed over 800,000 million tonnes (mt) of coal, mostly financed and supplied by large Japanese and Indian trading houses. Its monthly coal consumption is expected to be up to 500,000 mt once the second unit of 600-Mw gets commissioned by the end of 2015.
“We are still exploring possibility of acquiring mines (coal) outside India,” said Buhari, who was in Jakarta, Indonesia, to hold talks with the mine owners to ensure coal supply.
After several roadblocks and challenges, foundation stone for the project was laid in December 2009, and the the project started power supply to Tangedco, the power generation and distribution arm of Tamil Nadu Government.
The first unit was synchronised to the grid on September 7, 2014, and had attained full load of 600-Mw on December 2, 2014. The power generated from this Unit has been tied up with Tangedco under a 15-year power purchase agreement.
Buhari said the company would expand power generation capacity to 5000-Mw in the next 10 years, and added funding remained a key challenge. He said banks were reluctant to fund power projects due to factors like NPAs, uncertainty in PPA agreements and issues related to coal.
The company was hopeful it would attract financial institutions, considering it had addressed all the concerns. As per an agreement, Tangedco will procure power for Rs 4.91 each unit for the next 15 years.
The project is coming at a time when power shortage is expected to increase in south, including Tamil Nadu. Power deficit in south India is estimated to be around 9,254-Mw.
