This will help the promoters accelerate the process of financial closure of the project. The Industrial Finance Corporation of India (IFCI) had agreed to part-fund the project. The Rs 1,773 crore project is being jointly set up at Vemagiri in Andhra Predesh by the UK-based non-resident Indians Laxmi Mittal of Ispat group and OP Lohia of Indorama group. Initially Ispat industries was to hold the majority stake in the company but as Mittals have now decided to offload part of the equity to Lohias, the Ispat's stake will come down to 10 per cent. The 51 per cent controlling stake will be held by Lohias whereas 10 per cent will be picked up by the South Korean-based Daelim, which will undertake the equipment procurement and construction work of the project. the balance 30 per cent is likely to be contributed by the China Light and Power (CLP).Ispat planis to set up a project financing arm with CLP.

Initial construction work for the Naphtha-based project already started in October last year. The projects has already received the techno-economic clearance from the Central Electricity Authority (CEA) and is scheduled to be commissioned by 2000.

This is among the few liquid-fuel based short-gestation power projects awarded by the Andhra Pradesh two years ago. Fuel allocation for these projects was committed by the state. The company has also signed a power purchase agreement (PPA) with the Andhra Pradesh SEB. The output of the project will be supplied to the state grid.

Apart from the Vemagiri plant, Ispat Industries has also proposed to set up a 1082mw coal-based project at Bhadravati in Maharashtra. Bhadravati project is one of the eight fast-track power projects signed almost eight years ago.