Videocon Ties Up Rs 4,000 Cr For Chennai Power Unit

Videocon Power Ltd has tied up finances to the tune of over Rs 4,000 crore for its 1050 mw power project near Chennai.

About 65 per cent of the financing would be met by foreign financial institutions, while 28 per cent would be contributed by the Indian counterparts. The remaining seven per cent would be met through equity.

"Indian finances have been tied by to the tune of Rs 1,250 crore, with Industrial Finance Corporation (IFCI) leading the consortium with Rs 600 crore, that includes Rs 400 crore guarantee," director, Videocon Power, Kuldeep Drabu told PTI.

"Three foreign institutions -- Bank of America, ABN Amro and CSFB -- have agreed in principle to fund approximately Rs 3,000 crore," he said. The total cost of the project is estimated at Rs 4,500 crore. Bank of America has been appointed as the financial advisors for Videocon's North Madras Thermal Power Project-II, which will run two 525 mw units.

With this financial arrangement, Videocon expects to achieve the financial closure by September, after agreeing on an escrow account with Tamil Nadu State Electricity Board (TNEB).

Drabu said the escrow account will have funds for 37 days at a plant load factor (PLF) of 68.5 per cent. "Only documentation part is left," he said.

Apart from IFCI, other institutions participating in the project are Industrial Development Bank of India (IDBI) and Industrial Credit and Investment Corporation of India (ICICI).

Videocon is also negotiating with Power Finance Corporation (PFC) for Rs 200 crore, while talks are on with LIC and State Bank of India (SBI) for Rs 100 crore each, sources said. The company had signed the power purchase agreement (PPA) with TNEB two months back, Drabu said.

North Madras Project is a joint venture between Videocon and the Swedish Swiss conglomerate ABB which will hold 45 per cent in the power project. ABB is also the engineering procurement and construction (EPC) contractor for the project. The company intends to source its coal from imports initially. However, it would switch to its own mines - Thalcher Mining Private Ltd - for coal later, he said.

Detailed feasibility report for the power project was carried out by the German consultancy firm, Hermis, while National Thermal Power Corporation (NTPC) acted as the technical and environment advisor.