Kalpataru Satpura Transco Private Limited

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On 26th April 2013, Madhya Pradesh Power Transmission Company Limited (MPPTCL) awarded a concession of 25 years (which could be extended by another 10 years, including construction period of 15 months) starting from the date of grant of Transmission License, to Kalpataru Power Transmission Limited, for the development of 246km of 400kv DCDS twin Moose ACSR Transmission Line between Satpura and Ashta for evacuation of additional power from 2x250MW extension units at Satpura Thermal Power Station,in the state of Madhya Pradesh. The central region intra-state mega transmission project was aimed at system strengthening of Madhya Pradesh transmission grids. Madhya Pradesh Power Transmission Company Limited (MPPTCL) was mandated to conduct a two-stage bid process for the SPV - Power Transmission Company. MPPTCL adopted a concept of “unitary charge”-this unitary charge was the monthly fee for provision of transmission services indicated upfront by the grantor of concession – in this case the state transmission utility MPPTCL. A bidder could put in a bid that was lower than the unitary charge, in which case the bidder would be paying a “premium,” or he could quote a higher unitary charge implying that the bidder was seeking a grant. This grant came as Central assistance under the Viability Gap Funding (VGF) mechanism. The bidder quoting the lowest grant or highest premium was selected. In August 2012, MPERC (State regulator) had approved a notional "unitary charge" of USD 0.54mn (INR 31.5mn) to be paid by MPPTCL to KSTPL every month for the 1st year of operation. Int eh subsequent years, the Unitary Charge was to be reduced by 3% and revised to reflect 30% of WPI variation. Kalpataru Power Transmission Limited had won the bid by quoting the lowest grant of USD 10.4mn (INR 607.5mn @ 58.6 USD/INR) from MPPTCL. KPTL established Kalpataru Satpura Transco Private Limited (KSTPL), special purpose vehicle,on 10th May,2013 to execute the project.MPPTCL entered into Transmission Service Agreement (TSA) with KSTPL on 6th June 2013. The transmission license was awarded by MPERC (MP state electricity regulator) on 31st October 2013 for a period of 25 years (to be extended on request before the expiry of the license period). Adoption of Transmission Charges and grant of Transmission License by MPERC was done on 8th August 2012.The tariff adopted for the transmission system was valid for a period of 25 years. The tariff of the transmission assets beyond the period of 25 years were to be governed in accordance with the provisions of relevant CERC Regulations. Apart from the fixed Unitary Charges mentioned above, the other sources of revenue for KSTPL were - (a) 20% of actual wheeling charges (additional revenue) for transmission for other parties, on spare capacity availability (80% of additional revenue for MPPTCL), and (b)75% Revenue from Advertisement on poles (25% to MPPTCL) The project achieved financial closure on 2nd December 2013 at a grant/debt/equity ratio of 18/66/16.The estimated project cost at the time of financial closure was USD 58.2mn (INR 3412.1mn @58.6 USD/INR). Apart from an upfront grant of INR 607.5mn, financing comprised a 14-year 9-months term loan of USD 36.2mn (INR 2122.5mn), subordinated debt of USD 2mn (INR 116.7mn), and sponsor equity of USD 9.6mn (INR 565.4mn). ICICI Bank was the sole arranger for the term loan. The 14-year 9-month term loan had a quarterly repayment schedule.70% of the loan was to be repaid in 51 structured quarterly installments and 30% of the loan was to be repaid in single bullet installment along with the 51st installment The company started the construction in October 2013 and was expected to complete the work by April 2015. As on June 2014, 50% of the construction was reported to be completed.