This move of Adani Power is quite significant considering the present time when most firms in India face difficulties in raising funds abroad due to unfavorable economic conditions and tight liquidity. Further, the move to take loans from abroad comes at a time when Indian banks have reached the limit of exposure to power sector debt and are wary of the credit risk involved in power projects that use imported coal, besides a fall in merchant power tariffs that could upset revenue and profit projections of power producers.
As per the sources, the loan of around USD $800 million (Rs 3,658.70 crore) has been raised at interest rate of 350-360 basis points above Libor.
Spark believes that the funds would be used to finance the Mundra Power Project and part-finance the Adani Power’s Maharashtra project where the company is implementing a 1,980 mw thermal power project in Tiroda.
The 4,620 mw project in Mundra is on track and the company has already commissioned 2,640 megawatts, including four units of 330 mw each and two units of 660 mw each with supercritical technology. The remaining 1,980 mw is under construction and is expected to be operational by the end of this financial year. The company also plans to synchronise two more units of 660 mw each, based on supercritical technology, at Tiroda this year.
According to Spark, Adani Power is comfortably placed of achieving about 6,000 mw operational capacity in 2011-12 out of the total planned capacity of 16,500 mw that is under development across Gujarat and Maharashtra.
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