The total cost of the project is pegged at Rs 2,906 crore, with the equity component at Rs 872 crore and debt at Rs 2,034 crore. The Aditya Birla group holds 51 per cent of the equity and PowerGen of the UK holds the balance 49 per cent.

The move not only brings the project a step closer towards achieving financial closure, but also brighten PowerGen's plans to make an exit. The last hitch in achieving financial closure is the Madhya Pradesh State Electricity Board's approval for additional escrow.

According to sources, the FIs have asked the company to provide for an additional escrow cover of 1.2 mw for every mega watt of installed capacity. Even as the project has received an escrow for 578 mw, the sources said the FIs would like to be furnished with an escrow for a 693.6 mw capacity.

Sources close to the promoters say that PowerGen, which has already expressed its intentions to sell assets in India, will offload its stake in BPP once the project achieves financial closure. This, the sources said, will help PowerGen realise a better price for its stake.

PowerGen has announced asset sales in India, Australia, New Zealand and Indonesia in an effort to mop up funds to buy out the $3.2-billion LG&E Energy corp.

Besides BPP, PowerGen is also present through the joint ventures such as the Gujarat PowerGen Energy Corporation (GPEC) with the Gujarat State Electricity Board and the Tuticorin Power Project with the Southern Petrochemicals Industries Corporation. PowerGen's stake in GPEC is at 88 per cent, and that in Tuticorin Power the stake stands at 25 per cent.

BPP, which will be developed at Bina Sagar in Madhya Pradesh, was earlier approved by the Central Electricity Authority on a project cost of Rs 2,443 crore. The 567-mw project is the first phase of the total planned capacity of 1,000 mw.

The PPA for the project was signed in February 1996, and CEA accorded the techno-economic clearance in June 1997. The company has signed a fuel supply agreement with the South Eastern Coalfields for the supply of 2.7 million tonne per annum of coal from its Korba mines.

Further, the railways had also agreed to supply 10,000 tonne of washed coal every day to the power company. The EPC contract for the project has been awarded to Siemens-BHEL combine.