Mahindra Suryaprakash Private Limited

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In December 2011, Mahindra Suryaprakash Private Limited (MSPL), a special purpose vehicle of Mahindra Solar One Private Limited and Kiran Energy Private Limited, was awarded the license for setting up 2 units (20MW and 10MW) of grid connected solar Photo voltaic power projects located at Rawra village in Jodhpur district of Rajasthan, under the Jawaharlal Nehru Solar Mission (JNNSM) Phase-I Batch-II of the scheme. Under the JNNSM the total aggregated capacity of grid connected Solar PV Projects in Phase-1 was expected to be 500 MW. 150MW aggregate had already been allotted in FY2010-11 as a part of Batch-I of JNNSM Phase-I, and allotment for the remaining 350 MW Solar PV Projects was carried out through Batch-II bidding.The output from the project would be fed to the Northern,Eastern,Western and North Eastern (NEWNE) grid of India. The plant would use thin film PV cells supplied by First Solar. Mahindra EPC was contracted to execute the EPC for the project. The JNNSM mission had designated NTPC’s Vidyut Vyapar Nigam Limited (NVVN) as the nodal agency for procurement of solar power. In October 2011, NVVN invited RFQs from interested developers to develop 350 MW solar PV projects with a capacity of 5 MW each, with a minimum capacity of 5 MW and maximum of 50 MW each. NVVN received 210 RFQ responses on 17th November 2011 from PV solar project developers. As the total capacity of the shortlisted projects were in excess of the approved capacity of 350 MW Solar PV Projects, bidders were required to submit proposals offering maximum discount on the CERC (Central Regulator) approved applicable tariff for grid connected solar power projects for FY 2011-12 - a reverse bidding auction process. The last date for the submission of proposal was December 2011. NVVN received 180 bids from project developers indicating discounts offered by each over CERC determined tariff of US$ 0.329/kWh (INR 15.39/kWh @46.67 INR/USD). The winning bids for solar PV under Batch-II of JNNSM Phase-I varied from INR 7.49/kWh to INR 9.41/kWh, at an average bid price of INR 12.15/kWh. Since the target allocation for solar thermal projects was 350 MW, only the top 20 discounts were finally selected to set up solar power projects. MSPL had won the 2 projects (20MW+10MW) by quoting a tariff of US$ 0.200/KwH (INR 9.34/kWh - a discount of 605 paise). MSPL had entered into a 25-year Power Purchase Agreement with NTPC Vidyut Vyapar Nigam (NVVN) in January 2012, which was the the nodal agency to purchase solar power generated by independent solar power producers,under JNNSM. JNNSM provided for a scheme of "bundling" relatively expensive solar power with cheaper power from the unallocated quota of the Government of India out of the capacity of the NTPC based coal stations.This cheaper bundled power would then be sold to state power distribution companies at the CERC regulated price. This would bring down the gap between the average cost of power and sales price of power of the state Discom. The total capacity of 30MW was also eligible for carbon credits. MSPL would pass on the gross benefits of CDM to the distribution licensee (NVVN) in the following manner -(a) 100% of the gross proceeds to be retained by MSPL in the 1st year after the date of COD, (b) in the 2nd year, the share of MSPL would be 10% which would be progressively increased by 10% every year till it reaches 50%, where after the proceeds would be shared equally by MSPL and NVVN. Transmission and/or wheeling charges would be paid by MSPL. Financial closure took place in January 2013. The total project cost estimated at the time of financial closure was about US$ 59.1mn. The debt equity ratio for the project was about 72/28. Financing comprised of a 14-year 1-month term loan of US$ 8.2mn (INR 480mn), a US Dollar term loan of US$ 34.36mn (INR 1834.8mn @53.4 INR/USD), and sponsor equity of US$ 16.5mn (INR 969.2mn). The USD loan was provided by US EXIM Bank in July 2012. The INR 480mn 14-year 1-month term loa