Welspun Solar UP Private Limited

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In February 2014, Welspun Solar UP Private Limited (WSUP), a special purpose vehicle of Welspun Energy Private Limited (WEPL), was awarded the license for setting up a 5MW grid connected solar Photo voltaic power project located at Bikaner district of Rajasthan, under the Jawaharlal Nehru Solar Mission (JNNSM) Phase-II Batch-I of the scheme. Under the JNNSM Phase-II the total aggregated capacity of grid connected Solar PV Projects was expected to be 750 MW. The output from the project would be fed to the Northern,Eastern,Western and North Eastern (NEWNE) grid of India. The JNNSM mission had designated Solar Energy Corporation of India (SECI) as the nodal agency for procurement of solar power under Phase-II bidding. The winners were the project developers who sought the minimum possible funds to make their projects viable to sell power to SECI at the designated tariff. With an objective to promote local manufacturing, SECI invited bids in two separate categories, reserving half of the projects under domestic content requirement (DCR) restrictions. Separate bids were called for 375 MW capacity under DCR category and remaining 375 MW under open category. INR 18.75 billion was earlier approved for viability gap funding (VGF) of all the projects under JNNSM Phase-II Batch-I. 122 bids amounting to 2170MW were offered. Since the bids were more than the 750MW, winners were decided based on reverse bidding for viability gap funding demand. In the DCR category, bids varied from INR 13.5 million/MW to INR 24.56 million/MW. In the Open category, the bids varied from INR 1.7 million/MW to INR 13.5 million/MW. Welspun (WSUP) had won the bid under the DCR category by quoting a viability gap funding of INR 24.56mn/MW, which amounted to a VGF grant of US$ 2.0mn (INR 122.8mn @61 INR/USD). Welspun (WSUP) had entered into a 25-year Power Purchase Agreement with SECI. Transmission and/or wheeling charges would be paid by WSUP.The feed-in tariff was designated at INR 5.45/kWh (INR 4.75/kWh for projects claiming accelerated depreciation) for 25 years. Financial closure took place in October 2014. The total project cost estimated at the time of financial closure was about US$ 8.8mn (INR 537.2mn @61 INR/USD). The grant/debt/equity ratio for the project was about 23/58/19. Apart from the grant from SECI of US$ 2mn, financing comprised of a 15-year term loan of US$ 5.1mn (INR 310.8mn), and sponsor equity of US$ 1.7mn (INR 103.6mn). The term loan was priced at 200 basis points over the prevailing Base Rate (10%) and had a repayment schedule of 56 quarterly installments. The term loan was arranged by Central Bank of India. The construction for the project started in October 2014 and was expected to be commissioned by March 2015 (13 months from award).