STI Power, the promoters of the 347-mw naphtha-based Guna project in Madhya Pradesh, will be tying up $322 million for the projects financial closure (final debt and equity structure).
STI will be investing around $16 million through its Mauritius subsidiary in the project which has a 100 per cent foreign equity component of around $100 million.
The Commonwealth Development Corporation and four US-based power companies MCN Energy Group, Illinova Generating Company, Central and Southwest Corporation and Tenakasa International are to pick up 84 per cent equity.
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STI Power will be the largest liquid fuel-based power project to date which will be going in for financial closure. Both RPG and Reliance, which have larger projects, have yet to obtain the Central Electricity Authoritys clearance.
The Guna project, which is being set up at a total cost of Rs 1,074 crore, has a debt component of $225 million (Rs 800 crore) and total non-fund based support of $60 million. The non-fund based support indicates the guarantee that is being given to international export credit agencies in this case US Exim by Indian financial institutions (FIs) and commercial banks.
The Commonwealth Development Corporation which is also an equity investor as well as an Overseas Private Investment Corporation (OPIC) will be contributing $95 million to the debt component while FIs and commercial banks will put in another $70 million. The FIs include the Industrial Finance Corporation of India (IFCI) and the Power Finance Corporation (PFC). Punjab National Bank (PNB), Bank of Baroda (BoB) and the State Bank of India (SBI) are the commercial banks.
US Exim will be contributing $60 million for the project which, in turn, has been guaranteed by the IFCI, PNB, BoB and SBI. Sources indicated that US Exim would be giving a 3 per cent subsidy to STI because of the guarantee. IFCI, which also the lead manager for the project, will be raising around Rs 200 crore for the project.
STI Power is one of the six projects which has been given an escrow cover by the Madhya Pradesh government as an assurance of appropriate cash flow to its lenders.
The promoters are at present drafting the final fuel supply agreement, which is expected to be signed shortly. The project lies on the HBJ pipeline route, which will be used to supply naphtha to the project. US-based equipment major Black and Veatch will be the EPC contractor for the project.