Bses Kochi Project Achieves Financial Closure

The city-based power company, BSES, has achieved financial closure for its 165mw project proposed at Kochi, Kerala. BSES Kerala Power Pvt Ltd (BKPPL) which is executing the Rs 450-crore project recently received an in-principle approval from a consortium of banks led by Canara Bank for the entire Rs 315 crore loan.

The other members of the consortium are Indian Overseas Bank (IOB) and the Punjab National Bank (PNB). The rupee loan component will be Rs 155 crore while the balance Rs 160 crore ($40 million) will be raised abroad.

Disclosing this, BSES chairman and managing director, R V Shahi, said the first phase of the project is expected to be commissioned by September, and the entire project will be operational by March.

An agreement has already been signed for the first tranche of Rs 120 crore. This includes a foreign component of $16 million.The forex component is, however, subject to receiving approval from the ministry of finance.

The balance Rs 135 crore will be brought in as equity. BKPPL is a 80:20 joint venture between BSES and the Kerala State Industrial Development Corporation (KSIDC).

The former has already brought in Rs 34.5 crore as its equity contribution while KSIDC has pumped in Rs 7.5 crore. This is the first project awarded in Kerala through competitive bidding. The naphtha-powered project will initially function in the open cycle mode.

Later it will switch over to the combined cycle. The Rs 120 crore sanctioned in the first tranche will cover two units of the open cycle (43mwX2).The second tranche of Rs 200crore will cover the third unit of open cycle operations and the combined cycle operation of 36mw. The forex component of this loan will be $24 million (Rs 96 crore). The project also enjoys three financial comforts. It is backed by a letter of credit and by the escrow account mechanism. Besides, the Kerala government has issued a guarantee for the entire amount owed by the state electricity board.

The fuel supply agreement has been signed with Indian Oil Corporation (IOC). The IOC gas pipelines also run along the vicinity of the project site. This will enable the plant to switch over to gas as fuel at a later date.

"Building naphtha plants close to gas pipelines is part of a conscious decision by BSES. We are doing this in Gujarat as well as Kakinada in Andhra Pradesh. This will make the switch to gas as fuel much easier," added Shahi.

KSIDC had floated a tender for setting up small and medium power projects in the state. Over 100 parties had bid. BSES was allowed to set up two power projects of 43mw at Kochi. The third was awarded at Trivandrum.

Later on BSES was allowed to set up the third project too at Kochi.