IFC to fund Tata’s ultra mega power project

IFC to fund Tata’s ultra mega power project


New Delhi: The private sector lending arm of the World Bank, International Finance Corporation (IFC) has decided to fund the 4,000-MW ultra mega power project to be developed by Tata Power at Mundra in Gujarat.

“We are talking to Tatas and will participate in the project through a mix of debt and equity. We will also help them in obtaining syndicated loans from other financial institutions," said manager, South Asia department of IFC Neil Gregory.

The quantum of equity and debt to be provided by the IFC to Tata Power’s Mundra project, he said, would be determined after the negotiations.

Tata Power has secured the contract to develop the Mundra project on a Build-Own-Operate (BOO) basis with an estimated cost of Rs16,000 crore.

The project to be developed over seven to eight years was awarded to Tata Power on the basis of a tariff-based international competitive bidding by the ministry of power.

The government has decided to develop ten ultra mega power projects through private sector participation to meet the growing demand for power. These projects are expected to be commissioned during the 12th Plan period (2012-17).

Although the government had initially decided to develop nine projects, Union Power Minister Sushil Kumar Shinde yesterday announced that tenth project would be set up at Sundergarh in Orissa.

In addition to Tata Power, the government has awarded Sasan UMPP to Reliance Power which proposes to come out with an initial public offer (IPO) to develop the project.

The government has also invited bids for developing two more ultra power projects at Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand.

Earlier in May, IFC had invested in Lanco Group’s 600MW power project, which is coming up in Patadi village of Korba district of Chhattisgarh. The project would be commissioned by June 2008.

To operationalise the Mundra project, the state-owned Power Finance Corporation transferred the special purpose vehicle, Coastal Gujarat Power Ltd, to Tata Power Co.

Tata Power, meanwhile, has already signed power purchase agreements with seven power distribution companies who have agreed to evacuate power from the Mundra project after its completion.

The Rs16,000-crore project would supply 1,900MW to Gujarat, 800MW to Maharashtra, 500MW to Punjab and 400MW each to Haryana and Rajasthan.

The Gujarat Distribution Company would be the lead procurer of the project on behalf of all the power distribution companies.