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CHAPTER – 13
Financial Management and Economic Appraisal
13.1 General
13.2 Project Promoters
License of Arippara SHEP has been allotted to M/s. Cochin international
Airport Ltd., Cochin, by the Government of Kerala, on Build, Own, Operate
and Transfer (BOOT) basis under the policy of private sector participation
in implementation of Power Projects (3MW) vide G.O. (Ms) No.23/2014/
PD Dated: 21/07/2014. Subsequently on studying the detailed hydrology
and modifying the location, its capacity is enhanced to 4.5MW.
The financial forecast has been prepared following the guidelines issued by
Govt. of India / IREDA including all essential and requisite costs.
13.3 Project Cost
The Basic estimated Project Cost of 3260 Lakhs (without IDC & Excava-
tion) is based on current market rates. The cost also includes the cost of
Transmission Line from Arippara SHEP to nearest KSEB 33/11kV substa-
tion at Thampalmanna. The General Abstract & Abstract Cost is appended
with this Chapter.
13.4 Total Project Cost Estimate
The total funding required for the Project is as below:
Particulars Rs. Lakhs
1. Total cost of the Project (Excluding IDC) 3260
2. Contingencies
3. Working Capital margin
4. IDC
Total 30
Say
13.5 Project Schedule
Project Zero Date 01.05.2015
Period of Implementation 24 months
Expected date of Commissioning of
all the 3 units
30.04.20117
The Project is proposed to be completed in 24 months, presuming
that the financial closure can be achieved by 30.04.2015, and zero
date is 01.05.2017.
13.6 Means of Finance
CIAL plans to fund the total project cost through a combination of
debt and common equity with mix as shown in table below -
Particulars Amount (Rs. Lakhs) Percentage
Long Term Debt 2282 70%
Equity 978 30%
Total Project Cost 3260 100%
13.7 Assumptions for Financial Projections
Plant capacity 4.5 MW As per DPR
PLF 35% As per DPR
Design Energy (75% D.Y.) 14.717 MU As per DPR
Project Cost 32.6 crores Rs Lakh As per DPR
Equity Rs Lakh 30% of project cost
Loan Rs Lakh 70% of project cost
Cost / MW Rs Cr / MW
Auxiliary Consumption 1% KSERC
O&M Charges 14 Lac/MW KSERC
Escalation of O&M 5.72% KSERC
Rate of Interest on loan 12.5%
REC circular dated 27.10.14Non-conventional Generation – Pri-vate Sector Borrowers, Entity Grade III & IV
Interest on working capital 12.80% KSERC
Return on Equity for first 10 years
20% KSERC
Return on equity for 11th year onwards
24% KSERC
Plant Life 30 As per allotment of project
Loan repayment period12 years from moratorium
period
REC – Guidelines for Renewable Energy Projects
Sale rate (Rs /unit)
Rs. 4.16/unit for 13 years
from COD and Rs. 4.16/unit
thereafter
As per Kerala Small Hydro Power Policy 2012 and KSERC order No. 442/CT/2012/KSERC dated 1.1.2013
13.8 Profit and loss Statement
The profit and loss statement is enclosed in Annexure 13-1.
13.9 Balance Sheet
The balance sheet is enclosed in Annexure 13-2.
13.10 Cash Flow Statement
The Cash flow statement is enclosed in Annexure 13-3.
13.11 Profitability
Project IRREquity IRRAverage DSCRMin DSCRPayback period
13.12 Conclusion
The proposed Hydel Project gives an attractive Internal Rate of Return (IRR)
of 12.8%. Therefore, the Project is economically viable. The power gener-
ated through renewable energy resources is environmentally clean and Mini
Hydel Power Projects are being encouraged by World Bank, International In-
stitutions and has support from Ministry of Non-Conventional Energy
Sources, Government of India and Government of Kerala.