Financial Daily from THE HINDU group of publications
Saturday, Mar 16, 2002
Financial Daily from THE HINDU group of publications Saturday, Mar 16, 2002 |
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Industry & Economy
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Power KPCL begins work on Almatti project Our Bureau
BANGALORE, March 15 WORK on the 290 MW Almatti power project was kicked off today by the Karnataka Power Corporation Ltd (KPCL) though issues relating to payment of royalties still remain unresolved. The project, at an estimated cost of Rs 674.38 crore, is expected to be completed in the next three years. The project is being funded through 80:20 debt-equity ratio. The first unit of 15 MW is likely to be completed by 2004. Almatti will be an off balance-sheet project, with both KPCL and the Krishna Bhagya Jala Nigam Ltd (KBJNL) being equity holders. KPCL and the Karnataka Power Transmission Corporation Ltd (KPTCL) have already signed a draft power purchase agreement for the project. However, the PPA would have to be finally cleared by the Karnataka Electricity Regulatory Commission. KPCL has estimated the levelised tariff for the project to be in the region of 2.80 paise a unit. This tariff has been assumed on the basis of 90-per cent dependability. While KPCL has said that the finances have been tied up, it does not imply financial closure. ICICI and Power Finance Corporation are the project financiers. But release of the project debt, which is when financial closure is technically attained, will take place only after the regulator clears the power purchase agreement and the project promoters are in a position to offer a bankable financial security package. The State Government has already conveyed its intention of providing a guarantee cover for the debt-financing package amounting to about Rs 540 crore. Besides, issues relating to royalty payments remain unresolved. Under the existing agreement, the power project would be expected to make a royalty payment at the rate of Re 1 per unit to KBJNL. This payment leads to an escalation of the first year tariff to over Rs 4 a unit. Attempts to waive royalty payments have so far not been successful.
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