Sasan Ultra Mega Power Plant

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In April 2009, the 3960 MW Sasan Ultra Mega Power Project (UMPP) coal power plant developed by Reliance Energy Limited under a BOO format, reached financial closure. The plant(6 units of 660 MW each) was located at Sasan, in Sidhi district of Madhya Pradesh. Sasan UMPP was one of the first power project under the UMPP program of Power Finance Corp (PFC), Ministry of Power, and Central Electric Authority (CEA). Sasan Power Limited (SPL) was now a fully owned subsidiary of Reliance Power. The plant had been designed to use domestic coals from the allocated captive coal blocks, Moher, Moher-Amlohri Extension, and Chhatrasal. Sasan Power Limited (SPL) was incorporated in 2006 as a wholly owned subsidiary of Power Finance Corporation Limited to build the power plant. Reliance Power was awarded the Sasan project following an international competitive bidding process by quoting the lowest tariff(at a levelized tariff of INR 1.196/kWh). Ten consortia were invited to submit request for proposal (RfP). They included Tata Power Co (TPC), Reliance Power Ltd, Larsen & Toubro (L&T), Essar Power, Sterlite Industries, NTPC, Torrent Power, Lanco and JP Group.In the intial bid results, the consoritum of Lanco and Globaleq had quoted the lowest tariff of INR 1.196/kWh. However it emerged that during the bidding process, Globeleq and Lanco Infratech allegedly mis-presented facts, and were thus disqualified. So Reliance Power (who had intially quoted INR 1.29/kWh), matched the disqualified consortium with the bid of INR 1.196/kWh. SPL approved awarding the project to Reliance Power on 30 Jul 2007 under the provisions of the share purchase agreement and issued the LoI to Reliance Power on 2 Aug 2007. In August 2007, SPL signed 25-year power purchase agreement for contracted capacity of 3722 MW with 14 Procurers comprising 7 States and their off take shares were as follows; Madhya Pradesh (Lead Procurer)would be entitled for 37.50% share, followed by Punjab (15%), Uttar Pradesh (12.5%), Delhi (11.25%), Haryana (11.25%), Rajasthan (10%) and Uttarakhand (2.5%). The payment security mechanism in the power purchase agreement (PPA) comprises of a) revolving & irrevocable letter of credit b) charge over the incremental receivables of each of the procurers c)default escrow account and d) third party sale of electricity in case of default. The project cost was estimated to be approximately USD 3985.8 million. Financial close took place on 21 Apr 2009. SPL financed this project through an equity contribution of USD 1006.2 million (INR 48710m at 48.41 INR/USD) and a loan of USD 2979.6 million at a Debt/Equity ratio of 75/25. Debt was split between a USD 1850.7 million (INR 89594mn) 15-year term loan, a USD 642.8 million (INR 31120 mn) 20-year term loan, and a $486m 15-year ECB term loan. State Bank of India was appointed as the lead arranger on 2 Apr 2008. As per the PPA and EPC contract, Unit-I of the project was scheduled to be commissioned on Dec 31st 2011, while each subsequent unit was to be commissioned in 3 months thereafter with the last unit expected to be commissioned by 31st March 2013. As per original PPA schedule, project CoD was scheduled at April 2016, which was subsequently advanced to March 2013 for which supplementary PPA was signed in October 2008. The EPC contract had been awarded to Reliance Infrastructure Ltd. and the Boiler-Turbine-Generator (BTG) contract (super critical technology) had been awarded to Shanghai Electric Company.The mineable coal reserves in Moher and Moher-Amlohri Extension Blocks were estimated at about 447 MT of coal and thus, was expected to meet the entire coal requirements over the PPA period of 25 years.