Tata Power Company Ltd has moved close to executing the 4000 MW ultra mega power project (UMPP) coming up at Mundra, Gujarat, with the signing of the financial agreements for the Coastal Gujarat Power Ltd, the the special purpose vehicle formed for the Mundhra project.

The Mundra power project is the first of the UMPPs to herald the entry of super critical boiler technology In India, which is significantly environment friendly compred with the conventional ones using sub-critical boiler technology.

The cost of the project is estimated at Rs17,000 crore ($4.2 billion) with the first of the five units to be commissioned in September 2011. The entire project is expected to be commissioned by the end of 2012.

A consortium of banks including, multilateral agencies and exim banks are participating in the financing of this project. The financing comprises an equity component of Rs4,250 crore, external commercial morrowings (ECBs) of upto $1.8 billion and rupee loans of upto Rs5,550 crore.

The ECBs include funds from Export-Import Bank of Korea, International Finance Corporation, Korea Export insurance Corporation, Asian Development Bank and BNP Paribas.

The rupee lenders include State Bank of India (lead bank for rupee lenders), India infrastructure Finance Co Ltd, Housing and Urban Development Corporation Ltd, Oriental Bank of Commerce, Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Travancore and State Bank of Indore. SBI Caps will be the financial advisors and mandated lead arranger for rupee loans.

"The terms of debt financing provides us long tenure of loans supporting our competetive bid price assumptions," said Prasad Menon, managing director, Tata Power.

The project is scheduled to come up over a 1,000-hectare site in Mundra, Gujarat.

The project consists of five units, each of 800 MW, which will generate saleable power of 3800 MW to be supplied to five states - Gujarat, Maharashtra, Rajasthan, Haryana and Punjab. Tata Power says the super-critical technology and the choice of unit sizes will help the project achieve higher efficiency thus saving fuel and reducing greenhouse gas emissions vis-à-vis conventional technology prevailing in the country.

Tata Power has already placed orders for all major equipment.  South Korea's Doosan Heavy Industries & Construction Co Ltd,  will provide complete boiler island scope on an EPC basis, Japan's Toshiba Corporation will supply steam turbine generators.