The project is being appraised by IDBI and foreign lenders. Though the company had finalised the project cost and tariff and signed the power purchase agreement (PPA) with the Maharashtra State Electricity Board (MSEB) last year, costs have gone up significantly due to the rupee devaluation and increase in import cost.

Following cost overruns, the financing structure is being reworked. Besides, the centre's new directive regarding a counter guarantee too has added constraints on funding of the project, sources said.

The new counter guarantee norms do not provide any cover for Indian debt. It is limited to the foreign debt portion only to the extent if the project is terminated. The company is banking on the escrow facility from the state for thesame. Apart from this, factors such as heat rate and auxiliary consumption also have been examined in accordance with the new guidelines.

After firming up the loan and guarantee commitments, construction can begin though the documentation for financial closure may take another few weeks, sources said. According to them, financial closure can be achieved by early next year.

The coal-based power plan is one of the eight fast-track power projects selected through a memorandum of understanding (MoU) route and given a committed dual guarantee from the state and centre for payment to attract investment from Indian and foreign companies. The project was issued the counter guarantee by the new BJP-led government recently.

As per the PPA, the company will sell power to MSEB for Rs 1.65 per unit. The project will have a minimum plant load factor of 85 per cent instead of 68.5 per cent. After renegotiation early this year, cost per megawatt was worked out at Rs 4.28 crore.

The plant is being set up by theCentral India Power Company (Cipco), a joint venture between the Ispat Group, General Electric company of UK and Electricite de France (EDF) with a debt equity ratio of 70:30.

The power plant will procure coal from the Central India Coal Company (CICC), an entity floated by the Ispat group, to provide for the entire captive requirement of the plant.