Tata Power completes financing for 1050 MW Maithon thermal power project

Tata Power has reported having completed the financing of Maithon Power Ltd (MPL), with the syndication being over subscribed by nearly Rs1,050 crore, with the project promoters, Tata Power and Damodar Valley Corporation, having infused equity in excess of requirement as stipulated by the lenders, prior to the financial closure.

MPL is a 74:26 joint venture between Tata Power and Damodar Valley Corporation (DVC) for setting up a 1050 (2 x 525) MW coal-based Maithon Right Bank Thermal Power Plant at Dhanbad in Jharkhand.

The project, estimated to cost Rs4,450 crore, is being funded on a debt-equity ratio of 70:30, with the debt for the project being Rs3,115 crore being financed by banks led by State Bank of India. .

The State Bank of India Group took the largest exposure of around Rs1000 crore in consortium with 17 banks that, among other, included Allahabad Bank, Bank of Baroda, Canara Bank, Central Bank, Dena Bank, Indian Overseas Bank, J&K Bank, Oriental Bank of Commerce, Punjab & Sind Bank, Tamilnadu Mercantile Bank, UCO Bank.
SBI Capital Markets Ltd (SBICAP) is the sole financial advisor and arranger of debt for the project.

Tata Power and DVC are contributing equity proportionate to their shareholding in Maithon Power.

"The closure of financing for Maithon project is an important milestone," said Prasad R Menon, managing director, Tata Power. "The attractive financing demonstrates the faith of the tenders in the promoters, their execution capabilities and expertise to complete the project in time. The unique terms of debt financing provides us more flexibility in the execution of the project as well as help in controlling costs."

The first pyhase of the project of 525 MW is expected to be commissioned by October 2010,  with the second following suit second unit will be commissioned by March 2011. The long-term coal linkage has been allotted from the nearby Bharat Coking Coal Ltd (BCCL) mines and water allocation is from the adjacent Maithon reservoir.

MPL has also signed power purchase agreements with DVC for 300 MW and is the lowest bidder for 309 MW power requirements for distribution licensees in Delhi. MPL has obtained open access from Power Grid Corporation of India to transmit power through its infrastructure to the power deficit northern states.