Adani Power Maharashtra Limited–Transmission

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In July 2009, Adani Power Limited (APL) had formed Adani Power Maharashtra Limited–Transmission (APML-T), to build, own and operate a transmission system/network for evacuation of power generated by Adani Power Maharashtra Limited's (APML-G) 3300 MW power (1980MW in Ph-1 and 1320MW in Ph-2) generation project at Tiroda in Gondia district of Maharashtra. The project had two 400kV transmission lines from APML plant at Tiroda to the state utility substations located at both Koradi and Warora, respectively, which formed part of the Maharashtra intra-state transmission system. APML had received MSETCL’s approval for this project. It had also received a license for the transmission of electricity in the State of Maharashtra from the Maharashtra Electricity Regulatory Commission (MERC) for the operation of the Tiroda-Warora transmission lines. The Tiroda-Warora transmission line was approximately 219kms in length. Adani Power Maharashtra Limited–Transmission (APML-T) entered into a transmission development agreement with APML-G (“TDA”) for the development of transmission systems and networks for supplying power generated by APML-G to the state transmission system. APML-T also entered into a bulk power transmission agreement on 4th January 2011 (effective date of the Agreement being agreed to as August 14, 2012), with MSEDCL and MSETCL (“BPTA”) for evacuating the power generated by the power plant. The BPTA was valid for a period of 25 years from the date of execution or for the period of the transmission license whichever was longer. The Maharashtra Electricity Regulatory Commission on 6th July 2009 had issued a transmission license (subsequent amendment to the ‘Area of transmission’ in 30th March 2011), valid for 25 years, to APML-T for establishing transmission lines as envisaged in the TDA. As per BPTA, APML-T had the responsibility to procure and maintain all the consents required to erect the tranmission assets and to maintain and repair the transmission system as required by BPTA. MSEDCL would pay transmission tariff in accordance with the tariff orders issued by MERC from time to time (vide Maharashtra Electricity Regulatory Commission (Terms and Conditions Tariff) Regulations, 2005). Adani Power Maharashtra Limited–Transmission was awarded the license to construct this transmission project on a negotiated basis. While the said transmission lines had been planned by STU (MSETCL) and included in their State Transmission Network Plan 2008-09 - 2012-13, APML had expressed willingness to develop the transmission system as “Transmission Licensee” in order to ensure its completion, matching with the first unit of APML-G's thermal Power project. State Transmission Utility (MSETCL, vide its letter No. MSETCL/CO/STU/302B/929 dated January 20, 2009) had requested APML to undertake construction of the above transmission system. . As the said transmission lines had not followed development under the Competitive Bidding Guidelines issued by the Ministry of Power, MERC (Regulator) held that all the expenditure made on the Intra-State Transmission system was finally recovered from the Transmission System Users (TSU), as per the “pooled cost” concept. Hence, it was essential to take every step to optimize on the costs to be incurred in development of the projects. Hence MERC instructed that M/s Adani Power Maharashtra Limited –Transmission would be following a transparent competitive bidding process for development of the transmission project to ensure that the cost of the project was the most reasonable and most competitive. In pursuance of this, in September 2009 APML-T awarded the competitively bid EPC contract to a consortium of Powergen Infrastructure and Gammon India Limited. The project reached financial closure on 25th November 2011. The total cost of the project estimated at the time of financial closure was USD 139.3million (INR 6502mn @46.67 INR/USD). The debt equity ratio of the project was 70/30. Financing comprised a 13-yea PLEASE NOTE THAT IN 2011, THE NAME OF THE SPV WAS WRONGLY WRITTEN AS Maharashtra Eastern Grid Power Transmission Company Limited. THE SAME HAS BEEN CORRECTED AND OTHER PROJECT DETAILS CORRECTED AS WELL. This is a JV company between Government (26%) and Private Company (74%). So USD 41.5mn sponsor equity comprised USD 30.7mn from Private sector and USD 10.8mn from Government. The reader may interpret funding aspects accordingly.