SBI Caps had been retained financial advisor and sole arranger for Astha's 28 mw liquid fuel-based power plant being developed under the mini power plant policy of Andhra Pradesh. The unique nature of Astha's project--with financing primarily on project recourse (cash flows) basis--indicates the decision of the lenders to encourage industrial development through growth of the power sector.

International Finance Corporation has financed the project both in equity and loan amounting to $1.9 million and $7.1 million respectively. The domestic debt funding comprises rupee term loans aggregating Rs 50 crore from State Bank of India, Dena Bank, State Bank of Patiala and Central Bank of India.

Promoted by the Kundalia family of Hyderabad, this is the first private sector-owned co-generation power project in country set up in Pashamylaram Industrial estate being developed by the Andhra Pradesh Industrial Infrastructure Corporation in Medak district.

Astha has entered into an engineering, procurement and construction contract with ABB Generation of Sweden and is expected to issue the notice to proceed in November 1999. The promoters have completed most of the civil work and the project may be completed in 10 months and start generating power fromn September 2000. While fuel supply has been tied up on a long-term basis with Bharat Petroleum Corpoartion, an affliate of ABB is expected to be awarded the operations and maintenance contract.

The project would enjoy high energy efficiency of about 67 per cent (as a result of co-gen products like electrical energy, steam and distilled water) which is expected to increase to approximately 85 per cent when the air conditioning unit using the vapour absoption technology is installed.

The absence of long term PPAs up-front and payment security enhancement measures (such as escrow account/letters of credit) as traditionally available to IPPs made the financing of this project a challenging task.