PFC mega loan to boost Jhajjar power plant

Given such a large exposure in a single project where the total investment is around Rs 7,400 crore, sources said that PFC has a multi-tier payment security mechanism which, apart from a first charge on both movable and immovable assets of the power company towards PFC, also includes a first charge on all the revenues of the power company that will go into a trust and retention account. The deal is so structured that PFC would have the right to decide how the revenues of the power company would be used.

Such arrangements give the lender comfort that in the event of a default in payments towards the financier, the lender has recourse to recover funds using this credit enhancement facility.

With the debt funds in place, the project which is financed on a 70:30 debt-equity structure, achieves financial closure thereby allowing the promoters to go ahead with project development activities, sources said. PFC executives said that equity funds for the project have already been tied up by the promoters of the project.

The project, which is a joint venture between NTPC, the Delhi Government and Haryana Government, has been specifically conceived to meet the power requirements arising on account of the Commonwealth Games and is scheduled to become operational by October 2010.

Both Delhi and Haryana governments8217; equity in the Aravali Power is 25 per cent each, while NTPC would be holding the balance 50 per cent equity which works out to an investment of Rs 1110 crore.

Delhi8217;s investment is through Indraprastha Power Generation Corporation Ltd IPGCL, while Haryana8217;s investment is through Haryana Power Generation Corporation Ltd HPGCL. Power from the project would be shared between the two states on a 50:50 basis.

The crucial equipment supply for the project has been placed with BHEL.