Kaizen Power Plant Limited

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On 2nd August, 2010, Andhra Pradesh Industrial Infrastructure Corporation (APIIC) allocated Kaizen Power Plant Limited (KPPL), a Special Purpose Vehicle (SPV) promoted by Abhijeet Projects Limited (through its subsidiary Abhijeet Ferrotech Limited - AFL) for development of a 300 MW (2 units of 150MW each) coal based thermal power project at Andhra Pradesh Special Economic Zone (APSEZ) at Atchutapuram in Vishakhapatnam in the state of Andhra Pradesh. AFL was currently setting up a ferro alloy plant (8 x 22.5 MW capacity) to manufacture Ferro Manganese (FeMn) and Sillico Manganese (SiMn) at the APSEZ in Vishakapatnam. BHEL had been awarded the EPC for the plant, the scope included design,engineering, manufacture, supply, erection,testing and commissioning of Boilers,Steam Turbines and Turbo-Generators, along with state-of-the-art Controls and Instrumentation (C&I) and other associated auxiliaries. Given the proximity of the SEZ to Vishakapatnam and Ganagavaram port, it may be expected that imported coal would become the primary source of fuel for the plant. Other specific details of the project, including coal linkage, were not available in public domain at the time of collection of information.Abhijeet Project Limited (group company of Abhijeet group), was the EPC contractor for the project (the contract was a fixed cost and fixed time contract). AFL had not received the consent to operate from Ministry of Environment and Forest (MoEf) department for the project at the time of collection of this information. KPPL would cater to the captive power requirements of AFL (estimated at 153 MW, so approximately 51% of the power plant output of 300MW) at an agreed tariff of US$ 0.049/kWh (INR 2.30/kWh @47 INR/USD). In the interim period, power for AFL would be purchased from AP Transco.The details of PPA could not be confirmed at the time of collection of this information, but the residual power output was expected to be sold on mechant basis to the industries within the SEZ. The total project cost was estimated to be approximately USD 349.8mn (INR 16440mn @47 INR/USD). Exact details of financial closure were not available but company websites indicates financing at a debt/equity ratio of 80/20. So the financing would have a debt component of of US$ 279.8mn and sponsor equity component of US$ 70mn. An interim LC (letter of credit) facility of US$ 37.2mn (INR 1750mn @47 INR/USD) was arranged by UCO Bank on 26th September 2011.Rural Electrification Corporation Limited (RECL) was also expected to grant INR 900mn term loan. In the absence of other relevant data, we are assuming financial closure in September 2011. Project was situated in a SEZ, thus it would derive various benefits such as exemption on tax and duties levied by government. The power plant was expected to commence operations by April, 2013.