Shrinagar Hydro Electric Project

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The Shrinagar Hydro Electric Project is was a 330 MW project located 110 km from Rishikesh on the Alakhnanda riverRiver, in the state of Uttarakhand. The Srinagar Hydro Electric Project was being implemented developed on a build, own, operate and transfer (?) , BOOT basis for 45 years by Alakananda Hydro Power Company Limited (AHPCL). AHPCL was, the special purpose vehicle set up to implement the project and wasis wholly owned by the GVK Group. GVK Hydel Private Limited (GVK Hydel), a GVK Group Company, bought the project from Tata Power Company Limited (TPCL) in 2005. TPCL had earlier acquired the project in FY 2003-04 from the initial promoters of this project - Synergics Hydro Asia, the US subsidiary of Voith Siemens of Germany and the G P Goenka-promoted Duncan group. The project was then to be implemented by a special purpose vehicle (SPV) called Duncans North Hydro Power Company (DNHPC). Synergics Hydro Asia had held about 95% stake in DNHPC and the balance equity had been held by the Duncan group. The project was awarded under a Memorandum of Understanding based on direct negotiation between the initial promoters of this project and the undivided state of Uttar Pradesh. The Project was required to provide royalty to the Government of Uttaranchal (GoU) in the form of free power to the extent of 12% of the energy generated from the project to the State of Uttarakhand. In February 2006, GVK Hydel signed the 30-year Power Purchase Agreement (PPA) for the project with the Uttar Pradesh Power Corporation Limited (UPPCL) for sale of 88% of the power generated from this project. UPPCL is was the state owned utility in the state of Uttar Pradesh and is responsible for bulk power procurement for the state of Uttar Pradesh. The BOT contract period (45 years) is longer than the PPA tenure (30 years) which would allow the project company to sell electricity on merchant basis after the PPA expiries if the PPA is not renewed on mutually agreed terms. The project cost was estimated at US$ 517.25 million. The project achieved financial closure in August 2007. The debt/equity ratio of the project at financial closure was 80:20. The debt was syndicated by Axis Bank (formerly UTI Bank). Punjab National Bank was the lenders agent and Axis bank was the security trustee. The banks/financial institutions participating in the consortium were Andhra Bank, Central Bank of India, Dena Bank, Indian Bank, India Infrastructure Finance Company Limited, Industrial Development Bank of India Limited, Life Insurance Corporation of India, Punjab National Bank, UCO Bank, United Bank of India and Vijaya Bank. IDBI Bank Ltd. was the trust and retention account banker. The project was expected to be ready for commercial operations by early 2011.