India's Sterlite Energy Attains Financial Closure for 1,980-Megawatt Thermal Power Project in Punjab

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Researched by Industrial Info Resources (Sugar Land, Texas)--Sterlite Energy Limited (SEL) (Mumbai) has attained financial closure for the 1,980-megawatt (MW) Talwandi Sabo supercritical thermal power plant in Punjab. The company has firmed up funds of about $2.15 billion for the project, which is the largest thermal power plant being developed in the state.

Three 660-MW units will be developed on a build-own-operate (BOO) basis in the Banwala village of the Masna district. According to SEL's official website, the first unit is scheduled for commissioning by the fourth quarter of the 2013-14 fiscal year. The entire project is expected to be completed by the second quarter of the following fiscal year. However, media reports indicate that the power plant is scheduled for commissioning by 2012.

In October this year, SEL awarded the engineering, procurement and construction (EPC) contract for the project, worth $108 million, to Chinese firm Shandong Electric Power Construction Corporation (SEPCO) (Shandong, China). SEPCO, through its affiliate SEPCO III, is also executing an EPC contract for SEL's 2,400-MW subcritical thermal power project in Jharsuguda, Orissa. This project entails an investment of $1.77 billion and consists of four 600-MW units. The project is scheduled for completion by the third quarter of the 2011-12 fiscal year.

SEL is a wholly owned subsidiary of Sterlite Industries India Limited (NYSE:SLT) (Tuticorin, Tamil Nadu), which is the metals and mining arm of Vedanta Resources plc (LSE:VED) (London, England). SEL functions as the energy-generation arm of the group. The firm secured the Talwandi Sabo power plant development contract in July 2008 from Punjab State Electricity Board (PSEB) (Patiala, Punjab) under the competitive bidding route. PSEB established a special purpose vehicle (SPV), Talwandi Sabo Power Limited (Patiala, Punjab), to supervise the project. SEL acquired the SPV in September 2008 and obtained 2,100 acres of land and water linkage from a branch of the Kotla River for the project.

However, the project was shelved last year because of the global financial slowdown, which led Vedanta to curtail capital expenditure plans for the next four years by about $5 billion. In July this year, Vedanta announced plans to revive the project. SEL secured an extension from PSEB for completing financial closure until December 2009.

Coal requirement for the Talwandi Sabo power plant is estimated to be 7.9 million tons per year. SEL has received provisional coal linkages for power generation capacity of 1,800 MW. The firm has also signed a long-term power purchase agreement for the sale of 1,841.40 MW of power to PSEB.

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