Essar Power MP Limited

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In June 2009, the 1200 MW (2x600 MW)Mahan thermal power plant developed by Essar Group reached financial closure under a BOO format. The Essar Power MP Ltd. had signed a memorandum of understanding with Government of Madhya Pradesh for setting up this pithead coal based power project in Mahan, Singrauli district in Madhya Pradesh. The project would be developed in two phases of 600 MW each. Essar Power M.P. Limited (EPMPL) was granted the project through MOU route on a negotiated basis with Government of Madhya Pradesh. 700 MW of power from the generating station was proposed to be supplied to Essar group’s steel plant at Hazira in the State of Gujarat. According to the MOU, the generating station would supply about 80 MW (7.5% of net power) on real time basis at variable cost. In addition, Government of M.P had the first right of refusal for getting another 360 MW (30% of aggregate capacity) with the tariff to be decided through competitive bidding. The balance was expected to be sold on merchant basis.At the time of collection of this information the PPA with GoMP was yet to be signed formally. All clearances including regulatory and environment were in place. Entire land required for the project was in possession. The approval for environment and the mining plan for the coal block (approved for annual production of 8.5MT) had been received. The JV of Essar Power M. P.Ltd. and Hindalco (Mahan Coal Fields-60% to Essar Energy, 40% to Hindalco) had been allotted coal block at Singrauli for captive use for the power plant with estimated coal reserves of 125MT (expected to be useful for 12.5 years). Harbin Power Equipment of China was the EPC contractor for the project and Areva was the supplier of Balance of Plants. Evacuation of power would be through dedicated transmission facilities under implementation through Essar Power Transmission Limited for which the open access approval had been received. The project cost was estimated to be about USD 1104.1 million (INR 48610 million @48.41 INR/USD). The project achieved financial closure in June 2009. The project was funded through a debt/equity ratio of 3:1 (USD 752.9 million Debt and USD 251.2 million Equity) and was funded by a consortium of four lenders - ICICI, PFC, REC and PNB. ICICI was the lead bank. On 16th January 2013, Essar closed funding of US$ 21.3mn (INR 1250mn @58.6 INR/USD) for taking care of cost overruns of the Unit-II of the project. Financing comprised a 12 year term loan of US$ 21.3mn. Punjab National Bank was the loan provider. On 30th August 2014, Essar closed funding of US$ 161.5mn (INR 9850mn @61 INR/USD) for taking care of additional cost overruns of the Unit-II of the project. Financing comprised a 13-year 6-months term loan of US$ 161.5mn. The loan had a grace period of 1-year 3-months and a repayment schedule of 45 quarterly installments. SBI Capital was the lead arranger.The participating banks were ICICI Bank (2700mn), IDFC (400mn), Punjab National Bank (1350mn), Rural Electrification Corp Ltd (2700mn), Power Finance Corp Ltd (2700mn). Construction started in January 2008 and the construction activities were progressing as per schedule - commercial operation of Unit I (600 MW) was expected to be in June 2011 and Unit II (600 MW) in September 2011. Unit-I was declared commissioned and synchronized with grid on 26th December 2012. At the time of collection of this information, Unit 2 at Mahan had not been commissioned. Commissioning for Unit-I was done in December 2012. so status changed to "Operational"