Tata Power has tied up with a host of multilateral lending agencies and financial institutions to fund the foreign currency part of the $3.2 billion debt portion of its $4.25 billion, 4,000 mw, coal-fired Mundra Ultra Mega Power Project (Mundra UMPP) which is slated to come up near the Mundra port in Gujarat. Tatas bagged Mundra UMPP, the first ultra mega power project awarded by the Power Finance Corporation (PFC), the nodal agency for implanting UMPPs, through a global ?tariff by biding process? by quoting Rs 2.26 per KWh.

According to information available with FE, Tata Power is understood to have finalised agreements with a consortium of external lending agencies and institutions to fund the foreign currency denominated debt of the Mundra UMPP. The multilateral agencies which had agreed to fund the foreign currency part of Mundra UMPP?s debt are the Asian Development Bank and the International finance Corporation (IFC), Washington. Other external lending agencies of the project are K-Exim/KEIC and JBIC.

While K-Exim/KEIC, and JBIC would open a foreign currency denominated credit line of $1 billion to $1.5 billion, ADB and IFC would chip in with a total debt of $0.7 billion. Tata Power is talking to various domestic banks and FIs to raise the remaining rupee denominated loan to the tune of $1.5 billion to $2 billion. The company has roped in SBI Caps as lead arrangers of funds for the Mundra UMPP. The company may also raise funds by issuing rupee denominated bonds to fund the project.

The $4.25 billion Mundra UMPP has been structured on a debt to equity ratio of 80:20. Tata Power is planning to raise the equity portion of the project through a mix of internal accruals and preference capital issued to its promoters, Tata Sons. It has already announced plans to raise close to $310 million by way of issuing presence share to Tata Sons to part fund its capex plans.

The 4,000 mw (5 x 800 mw), Mundra UMPP would use imported coal as feedstock and the company has already tied up with KPC Indonesia to meet its requirement of 11.7 million tonne coals per year.