The Ispat group, promoters of the Bhadrawati power project in Maharashtra, has decided to reduce its project cost by $20 million (Rs 80 crore).
This comes after the Union power ministry advised promoters of all fast-track power projects and state governments to review equipment costs before the counter-guarantee is issued.
While signing the counter-guarantee with the Centre on Saturday, the promoters of the Bhadrawati project had told the Union power ministry and the state government that they would reduce project cost by $20 million before the power purchase agreement is finalised. The $1.4 billion project will have a dollar loan component of $880 million. The counter-guarantee will cover the foreign debt on termination of the contract with the state government. ECGD of UK and Coface of France will provide guarantees for the foreign loans. The company expects to achieve financial closure within six months.
The project has a 1000 mw power project, which is being executed by Central India Power Company, and a captive coal project, which is promoted by Central India Coal Company. The power project is a joint venture between the Ispat group, GEC and EdF of France. The promoters and the Maharashtra State Electricity Board are expected sign the power purchase agreement by August 4. The project's electricity tariff will be Rs 1.80 per unit based on an exchange rate of Rs 35 to a dollar.
