IFC to lend $450 mn for Mundra project

Tata Power's upcoming 4,000 mw Ultra Mega Power Project (UMPP) at Mundra in Gujarat made a crucial breakthrough in achieving financial closure, with the International Finance Corporation (IFC) agreeing to lend $450 million (Rs 1,800 crore) with a 20 year tenor.

IFC, a member of the World Bank, today said it has received the approval of its board to lend $450 million for the project.

"We are working on the financial closure and will announce the details soon," Prasad R Menon, managing director of Tata Power told Business Standard.

Tata Power is India's largest private sector power company with an operating capacity of 2,355 mw, including 1,838 mw thermal and 457 mw hydro energy.

Menon neither specifed any time-frame nor named the financial institutions that were working to achieve the financial closure.

Tata Power executives said the Board meetings of other lenders are set to approve the funding in the coming weeks. The $4.2 billion (about 16,000 crore) project will also be financed by Asian Development Bank (ADB) to the extent of $450 million, Korean export credit agencies ($800 million) and local banks ($1.5 billion).

The shares of Tata Power surged by 4.84 per cent on the Bombay Stock Exchange (BSE) today to close at Rs 1188.80.

Mundra UMPP, a greenfield coal-fired plant located near Mundra port in Gujarat, is India's first private sector power project with supercritical technology and is promoted by Gujarat Power, a special purpose vehicle company.

It was awarded to Tata Power by the Ministry of Power in December 2006 through tariff-based competitive bidding. The company had submitted the lowest tariff of Rs 2.26 a unit, a levelised rate for 25 years, with the first-year tariff pegged at Rs 1.91 per unit per kWh.

The first of the power plant's 800-megawatt units is expected to be commissioned in mid-2011 and the other units will be launched at intervals of four months each.

The plant will create 5,000 jobs during construction and 700 jobs once operational. It will provide power to industrial and agricultural users and serve 16 million domestic consumers in five states of northern and western India, an IFC statement said.

Tata Power had acquired stake in two Indonesian coal companies and a related coal trading company, all promoted by PT Bumi Resources Tbk (Bumi), Indonesia for about Rs 5000 crore to ensure fuel supplies for the project.