The Hindu Business Line : Reliance Power in talks to raise debt for Sasan project

Reliance Power, a subsidiary of Reliance Energy, is in talks with banks and institutions to raise debt to the tune of over Rs 14,000 crore to fund the Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh.

The company, according to institutional sources, is eyeing a debt-equity ratio of up to 90:10 for the Rs 16,000-crore pit-head based project, as against the normative 70:30 debt-equity ratio prescribed for power generation projects. Sources said that the company was looking at a minimum debt-equity ratio of 80:20, and is in talks with banks and institutions to explore the option of leveraging even higher debt to fund the project.

Granting developers the leeway to go in for raising higher debt vis-À-vis the normative 70:30 debt-equity ratio prescribed by the Central Electricity Regulatory Commission, was among the concessions being mulled by the Government for the UMPPs, especially in light of the scale of these projects and the funding requirement.

Other projects

Tata Power, which is executing the Mundra Ultra Mega Power Project, is also in the process of tying up funds for the 4,000-MW project in Gujarat, which is being executed using an 80:20 debt-equity ratio.

Reliance Power had bagged the 4,000-MW project after the firm matched the tariff bid of Rs 1.19 per unit quoted by the original winner of the project — the Lanco Infratech-Globeleq Singapore Pte combine. Reliance Power was the second-lowest bidder for the power project at Rs 1.29 per unit, behind the Lanco-Globeleq consortium, when the tariff-based bidding process was carried out in December 2006. The project was awarded to Reliance Power after an Empowered Group of Ministers declared Lanco’s bid as invalid earlier this year.

REL, currently, has an installed capacity of 941 MW of electricity through its power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa. The Sasan and Mundra projects are among nine UMPPs proposed by the Government to increase national power generation capacity by over 70,000 MW in the next five years.

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