RPG Kutch Solar Plant

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In July 2010, RPG group company Calcutta Electric Supply Company Limited (CESC), as part of its diversification into the solar energy sector, signed an MoU with Gujarat Energy Development Agency (GEDA) for setting up a 9-mw photovoltaic based solar power project in Kutch district in Gujarat under the Gujarat Solar Policy 2010. Integrated Coal Mining Limited (ICML), a company promoted by CESC, was implmenting the project. The project was being set up under Phase-II of the Gujarat Solar Policy 2010, which aimed at adding 500MW solar power for the state. In all, 24 developers accounting for 365 mw capacity, for PV projects ranging from 5 mw to 40 mw, had been approved under the solar policy so far. The Gujarat Solar Policy included a five-year no-change clause pertaining to the company's shareholding status, equity sharing of up to 49% by the technical partner, and an option to go for private land or government-approved solar park. ICML had acquired 60-plus acres of land for the project in Kutch district. The plant would be of 8 mw crystalline and 1 mw thin film. ICML had invited bids from EPC contractors for supply, erection and commissioning of the solar power plant. ICML had entered into a 25-year Power Purchase Agreement with the state utility Gujarat Urja Vikas Nigam Limited (GUVNL), in December 2010, which would be effected at the time of commissioning of the project. The APPC (Average Power Purchase Cost) as per the Gujarat Solar Policy 2010, was US$ 0.33/Unit (INR 15 per unit @ 45INR/USD) fro the first 12 years, and US$ 0.11/Unit (INR 5 per unit @45 INR/USD) from 13th year to 25th year. The total capacity of 39.2 MW was eligible for carbon credits. Proceeds of carbon credit were to be shared as follows: (a) 100% by project developer in the first year after the date of commercial operation of the generating station/ transmission system; (b) 2nd year – share of beneficiaries (DISCOM-GUVNL) @ 10% to progressively increase by 10% every year up to 50% and than to be shared in equal proportion, by the generating company and the GUVNL.Transmission and/or wheeling charges would be paid by ICML. Financial closure took place on May 2011.The total project cost was US$ 26.7mn (INR 1200 mn @45 INR/USD).The debt equity ratio for the project was 70/30. Financing comprised of Debt of US$ 18.7mn (INR 840mn @ 45INR/USD) and sponsor equity of US$ 8mn (INR 360mn @ 45INR/USD). Debt comprised of 13year Term loan from Yes Bank Limited. Apart from the loan, Yes Bank also provided financial assistance by way of issuance of letter of credit and annually revolving letters of undertaking to Integrated Coal Mining Limited. Construction for the wind farm was expected to start in October 2010 and commercial operation was expected to start in January 2012.