The Neyveli project is a 250-mw lignite coal-fuelled power plant to be built in Tamil Nadu at a cost of approximately $320 million. Preliminary construction of the project began this year, with commercial operation scheduled in 2002. CMS Generation will hold a 50 per cent equity ownership interest and operate the plant upon completion. CMS Generation and its joint venture partner, ABB Energy Ventures, arranged project financing for the Neyveli plant. An offshore portion of the financing totals 182 million Deutsche marks (approximately $100 million) while onshore loans are denominated in US dollars, Deutsche marks and rupees.

ICICI and State Bank of India are the onshore lead arrangers and ANZ Investment Bank, Bank of America, Citibank, KBC Bank NV, Paribas, BNP and Fuji Bank are the offshore lead arrangers.

The Neyveli project has signed a 30-year agreement to sell the power generated by the plant to the Tamil Nadu Electricity Board and will operate it as a baseload plant. Lignite for the project will be furnished by the Neyveli Lignite Corporation. ABB Alstom Power will provide engineering, procurement and construction services for the plant, according to a press note.

The Neyveli joint venture is the recipient of a counter-guarantee from the central government to assure international lenders a source of repayment for their loans if there is a payment default by the state electricity board or the first-line guarantor, the Tamil Nadu government.

"Neyveli is CMS Energy's third generating facility to go to construction in India. With this project financing we are making significant progress towards becoming a major energy provider which will help fuel economic growth," said Brian Corbin, vice president of development for CMS Energy Asia Pvt, Ltd, who heads the company's regional development office in Singapore.

Two CMS Energy projects in operation in India are the 235 mw gas-fuelled GVK Industries plant in Jegurupadu, Andhra Pradesh, which CMS began operating in 1997 as India's first independent power project, and the 200 mw diesel-fuelled GMR Vasavi plant in Chennai, the first independent power project in Tamil Nadu.