The three banks have given an undertaking to syndicate $207 million for the project. ANZ Grindlays, the financial advisors to the project, may finally tie up one of the three banks as a co-lead arranger.

The German export credit guarantee agency Hermes has given its in-principle approval for providing guarantee to foreign loans worth $274 million. On the basis of this guarantee, multilateral lending agency KFW has given its in-principle approval for extending a $106-million loan to the project.

RPG will hold 35 per cent of the company's equity and while German multinational Siemens AG, the engineering-procurement-construction (EPC) contractor will hold 15.1 per cent in the equity.

The power company has a debt requirement of Rs 1,750 crore for the project. The 702mw unit at Dholpur, will be one of the country'slargest liquid fuel power project. The project's debt-equity has been envisaged at 2.3:1.

The operations & maintenance (O&M) contractor for the project, yet to be finalised, will pick up 15 per cent to 20 per cent of the equity, sources said. Rest of the equity will be privately placed at a later date, they added.

Two companies have been short-listed for the O&M contract which would have a value equal to about 2.5 per cent of the total project cost annually. The shortlisted companies are the -based Southern Company and the Irish power utility ESBI.

The JP Morgan-I-Sec combine has been selected for arranging foreign equity for the project. RPG group sources said this could be up to 35 per cent of the equity base.

Domestic financial institutions led by ICICI have provided term loans as well as deferred payment guarantees (DPGs), which are used as an assurance for raising the foreign currency loans. ICICI, the lead institution, has sanctioned Rs 600 crore for the project.

Life Insurance Corporation(LIC) and the General Insurance Corporation (GIC) will together provide Rs 85 crore for the project.

Other domestic lenders to the project are State Bank of India (SBI) with an exposure of Rs 152 crore, Power Finance Corporation with Rs 300 crore and the Central Bank of India with Rs 75 crore.

The fund raising exercise was monitored by British legal advisors White and Case, and the plant is expected to be raised in 28 months from zero date.

The project had received the techno-economic clearance from the Central Electricity Authority (CEA) in March this year and the power purchase agreement was signed in August 1996.

The RSEB and the government of Rajasthan have agreed to extend an escrow to the power project. RSEB will also provide the transmission set up for evacuating the power generated in the unit.

The project's financial closure will be delayed by a few months as raising funds from the international markets has become difficult in view of the downgrading of the country's sovereign rating byMoody's.