NEW DELHI, April 25, 2005
—The International Finance Corporation, the private sector arm of the World Bank Group, has committed about $49 million of loan and equity financing to India’s AD Hydro Power Limited—one of the first hydro power plants to be financed on a merchant basis in South Asia. The project will contribute to the expansion of hydro-electric generation capacity and help alleviate peak electricity shortages in North India.
IFC’s financing consists of a loan of up to $42 million and equity of up to $7 million for a 10 percent stake in the project. IFC’s loan will have a maturity of 15 years and will be denominated in Indian rupees.
The project involves the construction, operation, and maintenance of a 192 MW run-of-the-river hydro-electric power plant in the Kullu district of Himachal Pradesh, and the construction of a 185 km, 220 kV transmission line that will extend to the interconnection point on the regional grid.
The power plant will utilize the perennial flows of the Allain and Duhangan rivers and combine the flows through two underground head race tunnels to feed a single powerhouse near Prini village. The estimated construction period is about four years and the total cost is approximately $195 million.
The project sponsor is Malana Power Corporation Limited which is owned 51 percent by the LNJ Bhilwara group and 49 percent by Statkraft Norfund Power Invest AS of Norway (SN Power).
The financing of low-impact hydro projects is a cornerstone of IFC’s strategy to increase its support for least-cost renewable energy. It is also consistent with the strategy of the Government of India to improve the hydro thermal balance in the country through the development of hydro-electric plants, particularly run-of-the-river, which generally have lower environmental and social impacts.
The project will have a number of other significant positive impacts, including employment creation during construction and operation, reduction of greenhouse emissions, and a community development program aimed at benefiting the communities affected by the project.
Mr. Francisco Tourreilles, IFC’s infrastructure director said, “This is an excellent example of IFC’s support for innovative infrastructure projects which are important to the Indian economy. IFC welcomes the opportunity to work with the Bhilwara group and SN Power to develop India’s power sector.”
Mr. Iyad Malas, IFC’s South Asia director, added, “We hope this project and SN Power’s participation will lead to further private sector interest in India’s power sector as well as more foreign direct investment.”
According to Mr. Ravi Jhunjhunwala, Chairman, LNJ Bhilwara Group, “We have greatly benefited from IFC’s experience in structuring such an innovative power project and hope this investment will forge a long-term partnership with IFC which will help us further contribute to India’s power sector.”
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s committed portfolio at the end of FY04 was $17.9 billion, with an additional $5.5 billion held for participants in loan syndications.
