Welspun Solar Punjab Private Limited

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In July 2013, Welspun Solar Punjab Private Limited (WSPPL, a subsidiary of Welspun Group), was awarded the license for setting up a 32MW solar thermal power project at various locations across Punjab under a competitive bid to acquire 300MW under Punjab New & Renewable Sources of Energy (NRSE) Policy 2012. Electricity generated from the project would be evacuated for consumption in the Northern Regional grid of India. WSPPL would be responsible for connecting their power evacuation transmission line with the nearest substation of PSPCL at the designated voltage level, for evacuating power generated at the solar facility. The Punjab Government had designated Punjab Energy Development Agency (PEDA) as the nodal agency for procurement of solar power. In March 2013, PEDA invited RFQs from interested developers to develop 300 MW solar PV projects in two categories. In Category-I, total 50 MW was proposed to be allotted. In this category, the minimum capacity of the project would be 1 MW and the maximum capacity would be 4 MW. In Category-II, total 250 MW was proposed to be allotted. The minimum capacity of the project would be 5 MW and maximum 30 MW. However, as of now PEDA had awarded contracts for only 200 MW. 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 2013-14 - a reverse bidding auction process. The CERC determined tariff for normal rate of depreciation was INR 8.75/kWh and for accelerated rate of depreciation was INR 7.87/kWh. The tariff discovered in the competitive bidding process varies from INR7.20 per kWh to INR 8.70 per kWh for Category-I projects and INR 7.67 per kWh to INR8.74 per kWh for Category-II projects. For Category-I projects, Welspun won the bid for supplying through a 2MW project at a net tariff of INR 8.56/kWh (US$ 0.146/kWh). For Category-II projects, Welspun won the bid for supplying through 20MW and 10MW projects at net tariff of INR 8.33/kWh (US$ 0.142/kWh) and INR 8.42/kWh (US$ 0.144/kWh) respectively. By March 2014, Welspun Solar Punjab Private Limited was expected to enter into a 25-year Power Purchase Agreement (starting from the date of commissioning) with Punjab State Power Corporation Limited (PSPCL), which was the agency to purchase solar power generated by independent solar power producers and specifically under the above bid. Transmission and/or wheeling charges would be paid by WSPPL. Financial closure took place on 13th November 2014.The total project cost (32MW) was estimated at US$ 44.1mn (INR 2692mn @61 INR/USD).The debt equity ratio for the project was 75/25. Financing comprised of a 13-year term loan of US$ 16.4mn (INR 1000mn) arranged by EXIM Bank of India, a term loan of US$ 16.7mn (INR 1019mn) arranged by IDBI Bank, and sponsor equity of US$ 11mn (INR 673mn). At the time of collection of this information the debt of INR 1000mn and sponsor equity of INR 250mn had been tied up. The other portion of financing was under discussion. Construction for the project was expected to start started in March 2014 and commercial operation was expected to start by March 2015.