Sembcorp will pick up 49% in Gayatri Project’s special purpose vehicle

Sembcorp, the Singapore based water and energy major, has entered an agreement to pick up a 49% stake in Hyderabad-based infrastructure company Gayatri Projects’s special purpose vehicle (SPV) for Rs 1,042 crore.

The SPV, Thermal Powertech Corporation India Ltd (TPCIL), is setting up a 1,320 mw power project at Krishnapatnam on the east coast of Andhra Pradesh at an outlay of Rs 6,869 crore.

While about 75%, or Rs 5,151 crore, of the power project cost is to be raised through debt, the remaining Rs 1,718 crore would be equity. The financial closure for the project is expected in the next one month.

Expected to begin the full commercial operation of its two 660 mw units by end-2013, the plant will be 70% fuelled by low-sulphur, non-coking coal allocated by a wholly owned subsidiary of Coal India. The remaining coal will be sourced from overseas.

The plant will use supercritical technology which allows for enhanced efficiency by consuming less fuel per unit of electricity generated compared to conventional subcritical coal-fired generating units. The first unit is expected to be completed by mid-2013.

The major part of the plant’s power output will be sold to various state electricity boards through long-term power purchase agreements secured via competitive bidding while the remaining output will be sold in the merchant market.

Tang Kin Fei, Sembcorp Group president and CEO, said, “This project is a major strategic milestone for Sembcorp and marks the company’s entry into the fast-growing Indian energy market.”

While Gayatri is taking up the entire 1,320 mw in the first phase, it has a provision to add another 1,320 mw in the second phase.

The project is expected to add significantly to Gayatri’s balance-sheet, primarily due to the merchant power provision.