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| Edited By: KV Ramana |Source: DNA |Updated: Mar 18, 2018, 03:12 AM IST
Nava Bharat Ventures Ltd, a Hyderabad-based company with interests in power, coal, ferroalloys and sugar, is planning to raise $500 million to fund its power project in Zambia.
The company is developing a 300 mw project in Zambia with a total outlay of $700 million. Additionally, the company would spend another $50 million on developing Maamba Collieries in that country.
“The debt syndication is going on. We would raise about $500 million to fund the project. The project would have 70:30 debt-equity. A large international bank based out of Africa would be the lead merchant banker,” a senior official of the company said. The equity component would borne by Nava Bharat and the Zambian government with Nava Bharat contributing about 65% of the equity.
The company is expecting the financial closure for the project by the end of the third quarter of this fiscal.
Maamba Collieries are being revived by the company for commencing coal production and the sale of coal sale from the mines is expected to commence by the third quarter. A mining contractor has been engaged by the company and the extraction would begin by August. The initial production in the coal mine is expected to be at about 30,000 tonne per month, which would be ramped up to 50,000 tonne with the eventual target being about one lakh tonne a month.
Meanwhile, on the power project front, the company is in the process of engaging an EPC contractor and the arrangement would be finalised in August. Power purchase agreements with local utility and the Zambian government are expected to be signed by mid-July.
“We are negotiating for over 10 cents per unit for signing the power purchase agreements. The cost of generation is estimated to be at about 8-8.5 cents per unit. The targeted return on equity is about 20%,” the official said.
Even on coal sales, Nava Bharat expects margins to remain attractive. The mines would produce high-grade washed coal and the net margins are estimated to be about $10-15 per tonne. “The realisation would be about $60-65 per tonne and the cost of mining including allied costs would be about $45-50,” he said.
