Will lend Rs 5,000 crore to import Chinese equipment for 3,960-Mw UMPP in Madhya Pradesh.
Three Chinese banks, along with Standard Chartered, will fund Rs 5,000 crore to import Chinese equipment for the 3,960-Mw Sasan Ultra Mega Power Project (UMPP) of Anil Ambani-promoted Reliance Power in Madhya Pradesh.
The final commitment letters from the Chinese banks to fund the project will be exchanged in New Delhi tomorrow as part of Chinese Premier Wen Jiabao’s visit to India. This will be the largest financing by Chinese banks to an Indian project across sectors.
These banks are Bank of China (BOC), China Development Bank (CDB) and Export-Import Bank of China (China-EXIM).
In October, Reliance Power and Shanghai Electric Group Company (SEC) had signed agreements to supply 660 Mw of boiler-turbine-generators (BTGs), the main power generating equipment for a power plant. The order was claimed to be the world’s largest BTG contract. The three Chinese banks and Industrial and Commercial Bank of China had also signed a memorandum of understanding (MoU) with Reliance Power to fund about $12 billion (about Rs 56,000 crore) for its power projects in the pipeline of about 37,000 Mw. Sasan, the first of the three UMPPs bagged by Reliance Power, requires six super critical units of 660 Mw each.
The funding will be on a long term basis with a maturity period of over 13 years. The project financing, in association with China Export & Credit Insurance Corporation, will be on a limited recourse basis, that is without any bank guarantees. The funding is based only on the project’s cash generation potential to service debts. The Chinese banks had done a detailed evaluation of the project, by appointing leading financial, technical, mining, legal and insurance advisors, said sources.
The Rs 20,000-crore project had achieved financial closure in April, last year. A consortium of 12 domestic banks led by the State Bank of India (Rs 3,500 crore) and Power Finance Corporation (Rs 1,600 crore) are funding Rs 14,550 crore as debt for the project.