The project, being implemented through Konaseema EPS Oakwell Power Ltd, is expected to be commissioned by September 2001, BVC vice-president CH Srihari told The Financial Express.

The group will pump in Rs 100 crore into the project; the remaining funds will come through a term loan of Rs 525 crore on nominal interest for a minimum of 10 years from IDBI-led consortium of financial institutions. The consortium of FIs comprises IFCI, IDFC and Power Finance Corporation.

The company plans to hold a majority stake of 51 per cent in the new venture, Srihari added.

He said out of the Rs 100-crore contribution, the company will raise Rs 60 crore by disinvesting 60 to 70 per cent of its equity holding in AP Gas Power Corporation (APGPCL) and the balance Rs 40 crore from its associated companies and internal accruals. Presently VBC group holds around 29mw out of total 270mw in APGPCL.

The remaining Rs 125 crore equity will be shared by institutions like LIC, GIC, UTI and EPC machinery suppliers, O & M contractors, NRIs, he said. According to him, the company will be signing an agreement with Gas Authority of India (GAIL) shortly for the supply of nine lakh SSCMD (standard cubic metres) per day of natural gas from East Godaviri basins.Srihari said the group has also entered into a PPA with APTRANSCO for a period of 15 years initially. The tariff will be the lowest of all in view of the use of natural gas as main fuel. However, he refused to divulge the exact rate.

According to Srihari, civil work will begin during first quarter of 2000 to be completed in 18 months.