The Hindu Business Line : REL asked to hike equity in Dadri project

FINANCIAL institutions lending to Reliance Energy Ltd's 3,740-megawatt (MW) Dadri power project have asked the promoters to raise the equity component to 30 per cent of the project cost, instead of the 10 per cent equity investment proposed by the company.

According to institutional sources, the consortium of lenders comprising ICICI, IDBI, SBI and Punjab Financial Corporation has asked Reliance Energy Generation, the special purpose vehicle floated by Reliance Energy for executing the project, to up its equity contribution to the 30 per cent normative project cost level suggested by the Central Electricity Regulatory Commission (CERC) for the funding of generation stations.

The 3,740-MW gas-fired project is the first stage of what is expected to be the world's biggest gas-based power project (with a capacity of 7,480 MW) proposed to be executed by Reliance Energy Generation at Dadri, Ghaziabad. The estimated cost of the first stage alone is around Rs 11,000 crore. According to sources, if the project is executed on the proposed 90:10 debt-equity ratio, the consortium of lenders would have to chip in with loans of as much as Rs 9,900 crore.

"The institutions have expressed their apprehension about funding the project at the proposed debt-equity ratio of 90:10. Reliance has been asked to up its equity contribution to the normative levels suggested by CERC. Even an 80:20 debt-equity ratio can be taken up for consideration but the current proposal of 10 per cent equity contribution is unacceptable," an institutional source said. The sources, however, said that once the finance issue is sorted out, the project would be on course for financial closure, with the SPV having already received environmental clearance for the entire project and several States, besides Uttar Pradesh, evincing interest in drawing electricity from it.

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