Coastal Energen's 1,200-mw power plant at Tuticorin in Tamil Nadu will see financial closure in two months, co-promoter Coal & Oil Group said.

Ahmed A R Buhari, founder president and chief executive officer of Coal & Oil Group, said a consortium of 19 banks, led by State Bank of India, has agreed to lend to the project. The first phase of the coal-fired thermal merchant power project, with a capacity of 1,200 mw, will need investments of Rs 4,500 crore, of which the debt component is Rs 3,450 crore. "The equity component of Rs 1,050 crore will come from accruals and investment from parent companies," Buhari said.

SBI and its associate banks will contribute 25-30% to the debt component, a Coastal Energen official said. "We are yet to tie up 10% of the debt portion. Some banks in the consortium are willing to take additional exposure and we are talking to some other banks, too," he added. The consortium includes Indian Overseas Bank, Punjab National Bank, Indian Bank and Corporation Bank, among others.

Coastal Energen bagged the Rs 8,500-crore 2,000-mw project in April 2008 and work on the first phase began last month.

Coastal Energen is about to sign a $450-million agreement with Chinese firm Harbin Power Engineering Co for boiler turbine generator (BTG) procurement. The plant is expected to be commissioned by 2011, after which the company might look at doubling the capacity to 2,400 mw as part of the next phase.

Coastal Energen has already signed a power purchase agreement (PPA) with Tata Power for 700 mw and is looking to sign PPAs for the remaining capacity. "A majority of the capacity will be distributed in Tamil Nadu," said Buhari. Of late, Tamil Nadu has been suffering from a severe power shortage. The state has a capacity of about 8,500 mw, short 1,500-2,000 mw of the demand.

Coastal Energen is a 70:30 joint venture between the Coal & Oil Group and UAE conglomerate AW Rostamani Group.

The writer was in Chennai at the invitation of Coastal Energen

G Seetharaman DNA