Rural Electrification Corporation will lend Rs 5,950 crore to the 2x800 mw Udangudi supercritical thermal power project in Tuticorin district of Tamil Nadu. The project is being implemented by a joint venture between Bharat Heavy Electricals Ltd and Tamil Nadu Electricity Board. The two partners will contribute 26 per cent equity each with 48 per cent coming from other investors. The loan will fully met the debt requirements of the project that is expected to cost Rs 8,500 crore and is scheduled for completion within the ongoing 11th Five-Year Plan period ((2007-12). This is understood to be REC's biggest debt exposure to a single project.
REC will also fully meet the debt component of the 1,000-mw Ennore power project being implemented by NTPC Tamil Nadu Power Company Ltd, an equal joint venture between NTPC and TNEB. The total amount sanctioned works out to Rs 3,796 crore, representing 70 per cent of the project cost of Rs 5,423 crore. During 2008-09, the joint venture will draw Rs 700 crore for the project. Coming up at Kuruvimedu village at Ennore near Chennai, it will also be the state's first power plant using 500-mw power units. The order for the main plant package has been awarded to Bhel.
Speaking to Projectmonitor, A. Valachamy, Chief Project Manager in REC's Chennai regional office said that with the recent granting of navratna status, REC is now empowered to sanction much higher loans without prior Central approval. Both the projects will be financed solely by REC i.e. without other consortium lenders.
Talking about assistance to Tamil Nadu's power sector, Valachamy said that in 2007-08, REC disbursed Rs 447 crore for rural electrification works in the state under the Rajiv Gandhi Grameen Vidyutikaran Yojana. It also disbursed Rs 848 crore to TNEB that included assistance to various transmission and distribution projects mainly to electrify rural areas.
In April last year, REC entered into an understanding with TNEB to lend Rs 16,000 crore to various power projects of the board during the 11th Plan period. The assistance will facilitate the creation of 3,000 mw of new power generation capacity, construction of 325 substations and associated evacuation systems.