IFC to lend Rs 1,800 crore to Tata's power project

International Finance Corporation (IFC) on Wednesday said it will lend $ 450 million (Rs 1,800 crore) to Tata Power for setting up the 4,000 MW Ultra Mega Power Project at Mundra in Gujarat.

IFC, which is a member of the World Bank Group, received the approval of its board to advance the amount for the $ 4.2 billion coal-fired power project that will supply electricity in five states of western and northern India.

In addition to supplying electricity to industrial and agricultural users, Tata's Mundra project will serve 1.6 crore domestic consumers, said an IFC release.

The first of the power plant's 800-MW units is expected to be commissioned in mid-2011, while the other units would be launched at intervals of four months each.

The ultra mega power project, which Tata's won through a competitive bidding process, will create 5,000 jobs during construction and 700 jobs once it becomes operational.

Of the total project cost of USD 4.2 billion, IFC will provide $ 450 million with a repayment of period 20 years, the release said, adding that long-term financing will improve the risk profile of the project and will facilitate funding from local banks of around 15 years maturity.

Other lenders to the project include Asian Development Bank ($ 450 million), Korean ECA ($ 800 million) and local banks ($ 1.5 billion), besides an equity component of $ one billion.

Complimenting India for using super-critical technology for coal-fired projects, IFC Director Rashad Kaldany said, "The project will encourage other developing countries to make responsible choices, using best available technologies and applying higher environmental and social standards."