L&T Uttaranchal Hydro Power Ltd

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L&T Uttaranchal Hydro Power Ltd, a subsidiary of Larsen & Toubro (L&T), was created to develop and operate 99 MW (3x33) run-of-the-river Singoli-Bhatwari hydel power project in the Rudraprayag district on the river Mandakini. The project involved construction of a 22-m high, 54-m wide and 80-m long barrage, 10.84km long head race tunnel, surface powerhouse. Three Francis turbines of 33 MW each were to be used to generate 472.18 million units of energy in a 90% dependable year. The project had a topographically challenging location for a run-of-the-river project with no dam. As a result of undertaking such heavy civil engineering works, a landed project cost of Rs105.4m per MW was much on the higher side. The project followed the PPP model and was to be executed on a 45 year BOT contract. For that period, L&T agreed to develop, finance, construct, and operate the power plant. The energy from this project was to be evacuated through a 220 KV transmission line and was envisaged to be sold on merchant basis. Uttarakhand Government issued the RFQs to execute the project on 28 October 2004. L&T Power Development won the tender for the hydroelectric power project after being selected as the highest bidder for undertaking the development of the initially 60MW Singoli Bhatwari hydropower scheme on a build, operate, own and transfer (BOOT) basis. Quoting the highest premium of Rs4.606m per MW, L&T emerged as the winner of the financial qualification process and was awarded the project by Uttaranchal Jal Vidyut Nigam (UJVNL) in December 2005. L&T acquired the development rights in May 2006; DPR was submitted in Dec 2007; CCEA gave the clearance in 11.07.2008. The project was initially awarded as a 60MW power plant because the hydrology data provided by the Central Water Commission were available for only 19 years, from 1975 to 1994. Subsequently, as L&T took up the detailed project report preparation, flow series data were available for a further period of nine years from June 1995 to May 2004. The additional hydrological data indicated higher water flow and an updated 90% dependable year1. Other studies and surveys carried out by L&T, including physical inspection of the project area, confirmatory topographical surveys, a review of the project layout and a reassessment of power potential, all pointed to an up-scaling possibility. Consequently, the project capacity was enhanced to 99 MW (3x33MW) from the earlier envisaged 60MW. The project was designed as a 100% merchant hydroelectric power plant envisaging power sales through short-term sales by power exchanges and bilateral transactions with traders, power sales to distribution utilities and bulk sales to industrial consumers. This was to take advantage of the high demand for power in India. The project cost was estimated to be Rs10.44 billion (US$227.42 million). Financial close took place on 29 Jun 2010. Financing comprised Rs7.83bn 14-year and 8months term loan debt and Rs2.61bn equity arranged by SBI and L&T. Thea senior debt to equity ratio was 75:25 and priced at 10.75% per annum linked to the lead bank’s (Punjab National Bank) benchmark rate. Project description not to be used as project highlight because most of the information comes from Project Finance Magazine