Reliance Power Moves on Sasan and Dadri Mega Power Projects

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Indian Power major Reliance Power Limited (BSE:532939) (Mumbai) announced that it has achieved financial closure for the 3,960-megawatt (MW) Sasan ultra mega power project (UMPP) in Madhya Pradesh. The financial closure was delayed because of a lack of financing support from banks and international financial institutions. The project will now be funded in a debt-to-equity ratio of 75:25. A consortium of Indian banks led by State Bank of India (BSE:500112) (Mumbai) and Power Finance Corporation Limited (BSE:532810) (New Delhi) has extended a loan of $2.57 billion for the project. India Infrastructure Finance Company Limited (IIFCL) (New Delhi) will provide a loan of $515.8 million, of which $433.33 million will be sanctioned by its international arm, IIFCL plc. Reliance Power took 21 months to achieve financial closure after it secured the contract to build the UMPP. The first phase of the Sasan UMPP, with a capacity of 1,320 MW, is expected to be commissioned by December 2011, followed by the second phase in March 2013.

Reliance Power is also expected to expedite work on its 7,480-MW Dadri power project in Uttar Pradesh. When operational, the Dadri power plant will be the largest single-location gas-fired plant in the world. The project, with an estimated investment of $4.12 billion-$5.15 billion, will be completed in two phases. The first phase, with an investment of $2.47 billion, is expected to generate 3,600 MW of power from four or five gas turbines. The project, which was conceptualized before the split between the Ambani brothers, heirs to the Reliance Empire, has already received environmental and procedural clearances, water supply, and land allocation of 2,000 acres. The project has now received thrust from the recent directive issued by the Mumbai High Court to Reliance Industries Limited (BSE:500325) (Mumbai) to provide gas to the project at $2.34 per million British thermal units. Industry sources state that this rate is 44% lower than the rate fixed by the government. For additional information, see news article from July 10, 2009 - Ambani Brothers' Dispute About Gas Prices Could Cost India $820 Million. The Dadri power plant will require gas supplies of around 28 million standard cubic feet in order to generate 7,000 MW of power.

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