Adani Maharashtra Power Limited

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In January and September 2009, the two phases (1320MW and 660MW respectively) of the 1980MW Tiroda Power Project developed by a consortium led by India’s Adani Power Limited under a BOO format, reached financial closure. In February 2007, the Government of Maharashtra had signed a MoU with the consortium for development of a 1980 MW domestic coal-fired thermal power plant at village Tiroda in the district of Gondia in Maharashtra, India. The power project was to be developed in two phases - Phase I comprised of two super critical units of 660 MW each, and Phase II comprised of one super critical unit of 660 MW. The scope of the project also included setting up of two double circuit 400 kV transmission lines of about 360km, water arrangement, coal mine development, railway sidings at plant & mine ends. The consortium of Adani Power Limited (77.38%), Millennium Developers Private Limited (26%), and Somerset Emerging Opportunities Fund (13.25%), established Adani Maharashtra Power Limited (AMPL), a special purpose vehicle, to implement the project. The consortium was granted the project through MOU route on a negotiated basis. Subsequently, after winning a competitive bidding by quoting the lowest tariff to Maharashtra State distribution company MSEDCL, AMPL executed a long-term power off-take agreement dated September 8, 2008 with MSEDCL for a term of 25 years from the date of commercial operation of the third unit of the power project. Pursuant to the off-take agreement, MSEDCL was entitled to the supply of 1,320 MW of electricity in bulk at a tariff ranging from INR 2.55/kWh for the first year to INR 3.47/kWh in the 25th year. The tariff for the contracted power consisted of capacity charges (based on contracted capacity of 80%), energy charges, an incentive charge payable for availability beyond 80.0% and a penalty charge for less than 75.0% availability. If the contracted capacity was not commissioned by its scheduled commercial operation date, AMPL was required to pay liquidated damages for the delay. MSEDCL delivered a revolving letter of credit and additional collateral in an escrow account. A third party sale of up to 25.0% of the electricity (including contracted capacity) was permitted if payment for purchase of power was not received within seven days from the due date. In addition, if the collateral was not restored within 30 days of the due date under the invoice, AMPL had the right to sell 100% of the contracted capacity to third parties. The negotiations with Industrial consumers/other distribution licensees were in progress for sale of the remaining capacity. Surplus power, if any, was expected to be sold on merchant basis. AMPL was also expected to supply surplus power to various units within the MPSEZL. The total investment required for the Tiroda Power Project was approximately USD 1913.4 million (INR 92630 million @48.41 INR/USD). The total expected cost for phase I of 1,320 MW was USD 1355.1 million (INR 65600 million at 48.41 INR/USD). For Phase I, financial close and syndication signing both took place on 30 Jan 2009. Financing comprised USD 1084.1 million (INR 52480mn) debt and USD 271 million (INR 13120mn equity). Debt was further split between a USD 1016.3 million (INR 49200mn) 14.25-year term loan, and a USD 67.75 milli (INR 3280mn) 15-year subordinated term loan. State Bank of India was the lead arranger. The total expected cost for phase II of 660 MW was USD 558.3 million (INR 27030 million). For Phase-II, financial close took place on 16 Sep 2009. Financing comprised USD 444.5 million (INR 21520mn) debt and USD 113.8 million (INR5510mn) equity. The debt was further split between a USD 416.6 million (INR 20170mn) 14.5-year term loan and a USD 27.9 (INR 1350mn) 15-year term loan. State Bank of India was the lead arranger. The first 660 MW unit of Tiroda Power Project was expected to be commissioned by July 2011, and the complete power project was expected to be fully commissioned by April 2012. The 3rd Unit (hence the entire plant was commissioned in June 2013. The Tiroda Power Project was approximately 260 km from the Lohara West and Lohara Extension coal blocks, which were the designated coal blocks to supply coal for the Tiroda Power Project. The project site was expected to be connected to the coal blocks by rail. The Tiroda Power Project had received a Letter of Intent from the Vidarbha Irrigation Development Corporation to draw water from river Wainganga. Tiroda Power Project was to source a significant portion of its coal requirements from the two captive mines-Lohara West and Lohara Extension. AMPL was awarded two coal blocks with combined estimated reserves of approximately 170 million tons for the Tiroda Power Project. In June 2009, South Eastern Coalfields and Western Coalfields provisionally agreed to supply approximately 2.5 MTPA of Grade ‘F’ coal and 2.2 MTPA of Grade ‘E’ coal for Tiroda Power Project.The coal quantity agreed to be supplied by Mahanadi Coalfields, South Eastern Coalfields and Western Coalfields was conditional upon AMPL achieving certain milestones over the next 24 months and then signing of definitive coal supply agreements. The BTG package as well as the EPC contract for Tiroda was awarded to Sichuan Machinery and Equipment Import and Export Company Limited. AMPL expected to evacuate power through Power Grid Corporation of India Limited (“PGCIL”) and Maharashtra State Electricity Distribution Company Limited (“MSEDCL”) sub-stations. Since the financial closure happened at different times in the SAME year 2009, it has been included in the same project instead of two separate projects