Lalitpur Power Generation Company Limited

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On 22nd April 2010, the Uttar Pardesh Government, under a new Power policy 2009, signed a MoU with Bajaj Group for development of a 1980 MW (3 units of 660MW each) coal-fired supercritical thermal power plant at village Mirchwara and Buraugaon,in Mahroni Taluk,in Lalitpur District, in Uttar Pradesh. In December 2010, Bajaj Group, through its subsdiaries - Bajaj Hindusthan Limited (74%) and Bajaj Power Ventures Limited (26%), owned Lalitpur Power Generation Company Limited (LPGCL), a SPV created by UPPCl for executing this project. The land required for the project was 1500 acres.Water requirement, estimated at 49 million cubic meters per annum, would be met from Rajghat Dam reservoir through a pipeline at a distance of 50 km. LGPCL 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 LGPCL. LGPCL 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. LGPCL had applied for the coal linkage in July and Dec 2009, but no firm linkage had been provided (at the time of collection of this information). LGPCL's coal requirement had been estimated to be around 8.51 MTPA for indigenous coal or 6.70 MTPA for imported coal. Coal was expected to be imported from Indonesia. LPGCL had sought the state government permission to import coal, kicking off speculations that the generation cost may go up which in turn, would put burden on the financially ailing UPPCL. As per the PPA, LGPCL was supposed to get the coal linkage from the Standing Linkage Committee by June 9th, 2012. Pursuant to the PPA, LGPCL must source its coal from a domestic coal linkage and must seek the permission of the procurers to purchase coal from any other source. If the procurers withhold their permission, Lalitpur Power is permitted to sell available power to any third party.The company had awarded EPC contracts for Boiler-Turbine-Generator (BTG) to Bharat Heavy Electrical Limited (BHEL) in March 2011. The power generated from the project of 1980MW was primarily expected to be sold to state owned utility company. As per the Power Purchase Agreement (PPA) signed with Government of Uttar Pradesh on 10th December 2010, LPGCL would sell 90% of the power generated from the project to UPPCL (through its subsidiary state Discoms- Paschimanchal Vidyut Vitran Nigam Limited, Poorvanchal Vidyut Vitran Nigam Limited, Madhyanchal Vidyut Vitran Nigam Limited,and Dakshinanchal Vidyut Vitran Nigam Limited, through a 25 year PPA, at a rate approved by the UP Electricity Regulatory Commission. Tariff would be determined on a two–part basis comprising Fixed Charge (Capacity Charge) and Variable Charges (Energy Charges) and shall be computed for each Tariff Period. The Tariff (Fixed Charge, Variable Charges) and Incentive shall be determined by the UPERC. LPGCL would be free to sell the rest 10% of the power to third parties. In addition, in the event that a particular procurer does not purchase its allocated quantity, LGPCL must offer the un-purchased power to the other procurers at the same rate. Only if the other procurers refuse to purchase the power, shall this power be available to third parties.Under the terms of the PPA, the procurers were responsible for the provision of transmission infrastructure and the associated transmission and interface costs. The cost of the Project (1980MW) was initially estimated to be approximately USD 2520.8 million (INR 118480mn @47 INR/USD). Financial closure took place on 24th August 2011 at a Debt/Equity ratio of 75/25. Bajaj financed this project through an equity contribution of USD 630.2 mn (INR 29620mn) and a debt of USD 1890.6 mn (INR 88860mn). The debt, arranged by SBI Capital and IDBI Bank, had a door-to-door tenor of 15 years and was priced at a margin of 400bp