Power project funds to be tied up

Banks are considering 8 projects for financial closure at a cost of Rs 25,000 crore

Banks and financial institutions are considering at least eight power projects with a combined generation capacity of over 7,300 Megawatts and an estimated cost of nearly Rs 25,000 crore for financial closure in the next round.

In addition, proposals for another nine projects at an estimated cost of Rs 14,000 crore are under consideration.

Officials in banks and financial institutions said the projects nearing financial closure included the Reliance-promoted 3,740 Mw Dadri project in Uttar Pradesh, Torrent Power's 1,050 Mw project in Gujarat, the 450 Mw Baglihar project in Jammu & Kashmir and Jindal Thermal Power's 500 Mw project in Karnataka.

The average interest cost on loans extended to the projects is proposed to hover between 8 and 9 per cent, with a repayment period of over 10 years.

Finance Minister P Chidambaram on Wednesday had said six power projects with a combined capacity of 3,700 Mw had achieved financial closure in the last two-and-a-half months, and 10 more projects were in the pipeline.

Power Minister PM Sayeed had set a deadline of June for achieving financial closures for private plants with a combined capacity of 8,000 Mw.

Projects, which are not on the near horizon for financial closure with an estimated cost of Rs 14,000 crore, include the 400 Mw hydel power unit by the Jaiprakash group, Lanco's 360 Mw Kondapalli project, the 370 Mw Vemgiri Power, Dhramshila Power, Katriya Hydel in Karnataka, Terra Energy and some projects of the National Hydroelectric Power Corporation.

Bankers said the government was interested in ensuring that capacity was added immediately. They said there were still a few glitches, with the promoters' share of commitments that were to be sorted out in the next few weeks.

In the case of projects like Jindal Thermal in Karnataka and Torrent, the government and banks have missed the deadline for financial closure repeatedly, with the latest being in May.

The other projects which were to achieve financial closure by last month included the 1,000 Mw Mangalore Thermal, the 550 Mw Raigarh project by Jindal Power and the Pathadi thermal power project in Chhattisgarh with a 250 Mw capacity.