Torrent spurns ADB stake plan

Firm was unhappy with rates offered by ADB for loan portion.

Torrent group has turned down an Asian Development Bank (ADB) offer for a soft loan and a 10 per cent equity stake in Torrent Power Generation Ltd's (TPGL) 1,095 mw gas-fired power project totalling Rs 244.60 crore.

ADB had offered to part-finance the project with a package which comprises an equity share of up to 10 per cent or Rs 92.9 crore ($20.6 million) in the project and an Indian rupee-denominated loan of up to Rs 244.6 crore (equivalent to $54.4 million) without government guarantee.

ADB confirmed that Torrent had indeed shot down such a proposal over a month back. "We were keen on a 10 per cent shareholding in TPGL and to provide a loan too, but Torrent declined our offer," said Kurumi Fukaya, senior structured finance specialist, Infrastructure Finance Division, Asian Development Bank.

Torrent Group, when contacted by Business Standard, declined to comment. However, sources in the company said that Torrent was unhappy with the interest rates offered by ADB and had insisted for reduced rate for loan portion of the package.

ADB, however, was unable to make more adjustment on interest part. The stalemate continued for over three months and finally ended in Torrent rejecting the offer.

The project cost is estimated at Rs 3,096 crore and it will be financed with a debt-equity ratio of 70:30. The Torrent Group power entities is planning to take 100 per cent of the equity of the project i.e. Rs 836.1 crore ($ 191 million). Torrent has already contributed Rs 279 crore towards its equity commitment in the project.

The project involves the construction and operation of a 1,095 mw gas-fired, combined-cycle power plant in Surat district in Gujarat.

The project is being implemented by TPGL, a special purpose company established by the Torrent Group.

The plant will be fuelled by natural gas to be supplied under a long-term gas supply agreement. Torrent group is exploring various options currently open for the feedstock. The options include natural gas from Liquefied Natural Gas or supply from Panna-Mukta-Tapti suppliers.

The project will sell power to Surat Electricity Company (SEC), Ahmedabad Electricity Company (AEC), and Power Trading Corporation of India (PTC) under long-term power purchase agreements.

SEC and AEC are private sector electricity distribution companies controlled by the Torrent Group and distribute power to major cities in Gujarat. The power plant is expected to begin commercial operations in November 2006 and achieve full completion in November 2007.

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TRIPPING OVER

ADB had offered to part-finance TPGL's 1,095 mw gas-fired power project with a loan of Rs 244.6 crore without government guarantee

Torrent power project cost was estimated at Rs 3096 crore