GMR ties up Rs 3,800 cr for power project

Hyderabad-based GMR Infrastructure has tied up funds for its 1,050-mw power project at Kamalanga in Orissa, the second major power project to cross the key financial milestone in recent days after ADAG group-promoted Sasan power project achieved financial closure last week.

GMR, best known for its work in modernising airports in Hyderabad and New Delhi, said it had tied up funding worth Rs 3,800 crore from a consortium of seven domestic financial institutions, led by IDFC and the State Bank of India (SBI).

IDFC has committed Rs 700 crore, while SBI will lend Rs 600 crore to the thermal power project, which will use coal from the captive field allocated to it by the Orissa government. Canara Bank, Corporation Bank, Central Bank of India, UCO Bank and IDBI will provide the remaining funds.

���We have tied up the funds and are expecting to achieve financial closure within 10 days,��� Raj Kumar, chief executive officer of GMR Energy, told ET. He added GMR Energy, a wholly-owned unit of GMR Infrastructure, hoped to complete the project within 36 months from the date of financial closure. The project will be commissioned by May 2012. Debt will be used to fund three-quarters of the project costs. GMR group is planning to fund the equity portion through internal accruals.

Last week, Reliance Power announced financial closure for its Rs 19,400-crore ultra mega power project at Sasan in Madhya Pradesh, demonstrating that large infrastructure projects are able to attract funding from financial institutions despite tight liquidity conditions. A consortium of 12 state-run banks, led by SBI, is financing the Rs 14,550-crore debt portion of the Sasan project.

The timing of the financial closure of these projects is significant as most global financial institutions have cut back on lending in the aftermath of the credit crunch. However, state-run banks in India have not been majorly impacted as badly by the global crisis, and many of them are flush with funds.

Analysts say projects backed by strong promoter groups are able to raise funds as lenders look for execution capability when it comes to funding large infrastructure projects.