Essar Power Jharkand Limited

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In May 2009, the Jharkand Government, signed a MoU with Essar Power Jharkand Limited (EPJL), a Special Purpose Vehicle (SPV) of Essar Group, for development of a 1800 MW (3x600 MW) coal fired pit head based thermal power station near Chandwa Tehsil, in Latehar district of Jharkhand. The project was planned to be executed in two phases, Phase-I would have 2units of 600 MW each based on sub critical technology, while phase-II would have 1unit of 600 MW based on super critical technology. EPJL was currently developing the 1st phase of 1200MW. The land required for the phase I project was 1840 acres which had been acquired; the land for the Phase II of the project had also been obtained. Water requirement,estimated at 1,92,000 m3/day, would be met from Damodar river and Nagarnadia nallah. EPJL had received all major clearances like environment clearance, chimney clearance etc. The State Government would assist in the procurement of land for the project but the full cost of the purchase of land would be borne by EPJL. EPJL was also responsible for any transmission infrastructure to connect the power project to the designated substation. The primary fuel for the project was domestic coal and would be obtained from Chakla coal block (open cast mine with 71 million tons mineable reserves) for phase I and Ashok Karkata coal block (open cast mines with 100 million tons geological reserves) for phase II. These coal blocks belong to Essar’s captive coal mines in Eastern coalfield basin. Coal handling system would be installed to receive feed from the proposed mines for the proposed 2units. These blocks were currently under development and would proceed through their respective clearance processes. The company had awarded EPC contracts for Boiler-Turbine-Generator (BTG) to Harbin Power Equipment Company, China; Electric Balance of Plant to Areva and Cooling Tower to SPIG in August 2007. The power generated from Phase-I of the project of 1200MW was primarily expected to be sold to state owned utility company. As per the Power Purchase Agreement (PPA) signed with Bihar State Electricity Board (BSEB) in July 2010, EPJL would sell 450MW of the power generated from the project to BSEB, through a 25 year PPA from the date of starting the commercial operations, at a levellised tariff of INR 2.64 per kwh. In August 2011, EPJL signed another PPA with Bihar State Electricity Board (BSEB) to sell 300MW of contracted capacity from its 1200MW, through a 25 year PPA from the date of starting the commercial operations, at a levellised tariff of INR 3.28 per kwh. On 9th May, 2012, EPJL signed another PPA with Noida Power Company Limited (NPCL), through a 25 year PPA from 30th April, 2014, to sell 240 MW of power of the contracted capacity from its 1200MW, at a levellised tariff (including transmission cost of INR 0.81/kWh) of INR 4.0868 per kwh. The residual 210MW was yet to be tied up at the time of collection of this information. The cost of the Phase I of the Project (1200MW) was estimated to be approximately US$ 1212.8mn (INR 57000mn @47 INR/USD). Financial closure took place on 20th September 2011 at a Debt/Equity ratio of 75/25. EPJL financed this project through an equity contribution of US$ 304.2mn (INR 14300mn) and a debt of USD 908.5mn (INR 42700mn). The debt, arranged by ICICI Bank Limited, had a door-to-door tenor of 15 years. The loan would be repaid in 40 quarterly instalments. The participating banks were Andhra Bank(1000mn), Bajaj Finance Limited(1000mn), Punjab & Sind Bank(2000mn). The cost of the Phase II of the Project (600MW) was estimated to be approximately US$ 467.8mn (INR 25000mn @53.44 INR/USD). Financial closure took place on 26th June 2012 at a Debt/Equity ratio of 75/25. EPJL financed this project through an equity contribution of US$ 116.9mn (INR 6250mn) and a debt of USD 350.9mn (INR 18750mn). The debt, arranged by ICICI Bank Limited, had a door-to-door tenor of 15 years. The loan would be repaid in 40 quarterly instalm