December 04, 2008

Reliance Power to raise debt for Sasan project

It is reported that REL’s subsidiary Reliance Power is in talks with banks and institutions to raise debt to the tune of over INR 14,000 crore to fund the Sasan ultra mega power project in Madhya Pradesh.

According to institutional sources, Reliance Power is eyeing a debt equity ratio of up to 90:10 for the INR 16,000 crore pit head based project as against the normative 70:30 debt equity ratio prescribed for power generation projects. It is reported to be looking at a minimum debt equity ratio of 80:20 and is in talks with banks and institutions to explore the option of leveraging even higher debt to fund the project.

Granting developers the leeway to go in for raising higher debt vis a vis the normative 70:30 debt equity ratio prescribed by the Central Electricity Regulatory Commission, was among the concessions being mulled by the Government for the UMPPs, especially in light of the scale of these projects and the funding requirement.

Reliance Power had bagged the 4,000 MW Sasan project after the firm matched the tariff bid of INR 1.19 per unit quoted by the original winner of the project, Lanco Infratech Globeleq Singapore Pte combine. The project was awarded to Reliance Power after an empowered group of ministers declared Lanco’s bid as invalid earlier this year.

REL has an installed capacity of 941 MW of electricity through its power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa. The Sasan and Mundra projects are among 9 UMPPs proposed by the government to increase national power generation capacity by over 70,000 MW in the next 5 years.