Jaigad Power TransCo Limited

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In April 2009, a 169km transmission system/network, developed by JSW Energy Limited (JSWEL) at Jaigad in Maharashtra under BOO format, reached financial closure. The transmission network would primarily evacuate the power generated by JSW Energy Ratnagiri Limited's (JSWERL) 1200 MW power generation project at Jaigad. The project had two 400kV transmission lines from JSWERL plant at Jaigad to the state utility substations located at both New Koyna and Karad, respectively, which formed part of the Maharashtra intrastate transmission system. The New Konya and Karad transmission lines are approximately 57km and 112km in length, respectively. On August 5, 2008, JSW Energy Limited had formed Jaigad Power TransCo Limited (JPTL), a joint venture company with Maharashtra State Electricity Transmission Company Limited (“MSETCL”) to build, own and operate the transmission system/network. JSWEL held 74% and MSETCL held 26% of the equity capital of the JV Company. JPTL was awarded the license to construct this transmission project on a negotiated basis. As the JPTL transmission line had not been identified for development under the Competitive Bidding Guidelines issued by the Ministry of Power, JPTL had applied for the grant of Transmission License for development and operation of the proposed transmission project. 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 Jaigad Power Transco Limited to follow 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 directive, on July 2, 2008 JPTL awarded the competitively bid EPC contract to Larsen & Toubro. The cost of EPC Contract was USD 92 million (INR 4460 million) which was inclusive of supply and service contract. JPTL entered into a transmission development agreement with JSWERL on June 11, 2009 (“TDA”) for the development of transmission systems and networks for supplying power generated by JSWERL to the state transmission system. JPTL also entered into a bulk power transmission agreement with JSWERL and MSETCL on June 11, 2009 (“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 February 8, 2009 had issued a transmission license, valid for 25 years, to JPTL for establishing transmission lines as envisaged in the TDA. As per BPTA, JPTL 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. JSWERL would pay transmission tariff in accordance with the tariff orders issued by MERC from time to time. The total cost of the project was estimated to be USD 119.8 million (INR 5800 mn at 48.41 INR/USD), which was expected to be financed by equity of USD 29.9 million (INR 1450 mn) and 12.5 year term loan of USD 89.9 million (INR 4350 mn) at a debt/equity ratio of 75/25. JPTL achieved financial closure and entered into financing agreements with a consortium of banks led by State Bank of India on April 29, 2009. Other members of the syndicate were Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank, State Bank of India, United Bank of India. The COD of Jaigad-New Koyna line (57 kms) was expected to be by November 2009 and of Jaigad-Karad line (112 kms) was expected to be by May 2010 as per the implementation agreement. The construction was in progress, and as per the latest information available, the Jaigad-Koyna Line had been successfully charged, and Jaigad-Karad line was expected to be commissioned by November 2010.