Nava Bharat's Zambia project to achieve financial closure by June-end

Power project is extension of coal mine operations of Mamba Collieries Limited

Hyderabad-based Nava Bharat Ventures Limited is likely to achieve financial closure by this month end for a 300-Mw coal-fired thermal power project being set up in the African nation, Zambia.

The power project is an extension of the coal mine operations of Mamba Collieries Limited (MCL), in which the company's wholly-owned subsidiary Nava Bharat (Singapore) Pte Limited holds 65 per cent stake. The balance is held by ZCCM-Investment Holdings Plc, an investment arm of the government of Republic of Zambia.

The company has already signed a power purchase agreement (PPA) for a 20-year period with the government of Zambia and the government's decision to extend the guarantee against the utility's payment obligation as insisted by the project lenders has finally cleared the way for the financial closure, according to GRK Prasad, executive director of Nava Bharat Ventures.

Nava Bharat has so far invested about $ 223 million in the project mostly as its equity out of a total funding requirement of $830 million for the coal and power projects. The company had revived the coal mining operations in MCL, which is estimated to have 140 million tonnes of high grade coal and thermal coal reserves spread on 1070 hectares out of a total concession area of 7,900 hectares.

Responding to a question in a recent earnings conference call in this regard, Prasad said the coal mine operations had achieved break even in 2014-15 with a total volume of 100,000 tonnes of high-grade coal earning about $ 48 a tonne.

“Our Zambian company — Mamba Collieries Limited has achieved considerable progress with reference to debt financing. After the latest stipulation of lenders on the enhancement of security mechanism, the Zambian company has been able to obtain the approval of the Government of Zambia for a callable guarantee against the utility's payment obligation for power purchase,” Prasad said.