"We would be able to achieve the financial closure for the project by December, this year," sources in Kalinga Power told The Financial Express. The sources said the corporation is planning to start the project work from January next year with a view to commissioning the plant by early 2003. Foster Wheeler and Parson have been appointed EPC contractors for the project.

Under the guidance of financial consultant Lehman & Brothers, Kalinga Power is lining up the dollar and rupee creditline for the Rs 2280-crore project. While the dollar debt has almost been tied up with export credit agencies of US and UK and commercial banks of Canada, the domestic debt will be lead-managed by ICICI Ltd.

According to thememorandum of association of the project, the foreign promoters based in the US and UK will chip in the entire equity component of 30 per cent of the project cost in dollar terms. While 60 per cent of the project cost will be foreign debt, the remaining 10 per cent debt will be financed through domestic credit. The main promoter is required to hold at least 11 per cent of the project equity.

Meanwhile CEA, which has already issued a techno-economic clearance, has fixed a ceiling price of Rs 2280-crore ($314 million plus Rs 953 crore) on the project cost.

The corporation has acquired 1000 acres at Dubri in Jajpur district for the project. It has also obtained the required permission for sourcing 60 cusecs of water from the River Brahmani. The forest and environment clearance has been received from the Centre as well as the state and to meet the projected 90 million tonnes coal demand of the 2 X 250mw plant, the corporation has tied up the Utkal- A coal mine in Talcher. The mine promises a 300 million tonnedeposit.

The company sources said an agreement with the Indian Railways will be signed soon for transportation of coal from the mines to the plant site.The sources also said a power purchase agreement with Gridco will be signed sometime in June. With the capital cost of the project pegged at Rs 2280 crore, the levellised tariff cost would be about Rs 1.83/kWh at 80 per cent plant load factor and Rs 1.88/kWh at 68.5 per cent PLF.

The Dubri project of the Kalinga Power Corporation is one of the six independent power projects with whom an MoU was signed by the Orissa government in early 90s following the liberalisation of the Indian economy.However a state government decision not to enter into a PPA with any other privately promoted power utility -- it already signed such a deal with AES -- pushed the Dubri project into the realms of uncertainty. Later considering the location of the project, where a massive steel complex is also proposed to be set up, the government agreed to ener into a PPA with thecorporation, but on revised terms.

The revised draft PPA was signed between the government and the corporation after a thorough re-negotiation had been carried out by a high-level review panel of the government.