State owned coal miner Singareni Collieries Company Limited (SCCL) has achieved financial closure for

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its 1,200 MW (2 X 600MW) of coal-fired power plant coming up at Pegadapally in Adilabad district of Andhra Pradesh.

Power Finance Corporation has agreed to lend about Rs 4,000 crore out of the Rs 6,000 crore total funds needed for the project. The remaining Rs 2,000 crore will be arranged by SCCL as its equity contribution with the help of a combination of internal accruals, said its chairman and managing director S Narsing Rao.

As at the end of March last year, the company’s cash reserves amounted to Rs 1,000 crore.

Rao said there was a clamor from banks to finance the project and PFC is charging an interest rate of 10.5 per cent.

Having acquired about 1,750 acres of land required for the power project, the company has signed a draft power purchase agreement with the AP Power Distribution Company (AP Discom), the state-owned power distributor, at an indicative price of Rs 2.82 a unit. SCCL proposes to use about 150 MW of power for auxiliary purposes and sell the 1,050 MW as per the power purchase agreement.

Rao said SSCL will use coal from two of its underground mines that were abandoned earlier, which still have reserves of 160 to 170 million tonnes that will last 40 years. The 1m200MW power facility requires about 4 million tonnes coal annually for the power plant.

Though the company initially was hopeful of commissioning the power plant in April 2014, the schedule is likely to stretch beyond that, he said. “We see some slippages happening in the civil works and this might delay the commissioning of the plant by few months.”

SCCL plans to place the order for boiler, turbine and generator with BHEL on a nomination basis in about two months. “BHEL will deliver the equipment in 36 to 42 months,” the CMD said, adding that the balance of plant will be awarded through an international competitive bidding route later.

The detailed project report indicated Rs 3,000 crore for the power plant equipment and about Rs 1,200 crore for the balance of plant.

For the year ended March 31, the company has produced 51.33 million tonnes of coal, surpassing its set target of 50.5 million tones, and reporting highest ever turnover of Rs 8,936 crore, a growth of 14 per cent over the previous fiscal.

However, the company suffered a fall in profit after tax at Rs 320 crore from Rs 368 crore last year owing to a 21 per cent rise in wage costs on the back of inflationary pressures during the year.

Rao said the company proposes to start an underground and three open cast mines with a capacity of 3.84 million tonnes per annum during this financial year. The capital expenditure was estimated at about Rs 3,300 crore including Rs 1,600 crore for mining during the year.