Lenders approve higher cost in 4 Lanco Infratech projects.

In a respite for cashstrapped Lanco Infratech, three groups of lenders approved cost overruns of almost 30 per cent for four power projects, enabling work on them to resume after more than two years. Separately, the infrastructure company secured fuel supplies for power plants that will augment its generation capacity.

The cost overrun approvals were granted for coal-fired projects at Amarkantak-II, Babandh and Vidarbha, each of 1,320 MW, and the 76 MW Mandakini hydro power plant, involving a combined investment of Rs. 33,000 crore.

Amarkantak-II in Chhattisgarh is financed by a consortium of lenders led by Power Finance Corporation, Babandh in Odisha is backed by an ICICI Bank-headed group and Vidarbha in Maharashtra by institutions led by Punjab National Bank.

'The lenders' nod to revised financial closure for Rs' 33,000 crore of projects not only helps execute these 4,036 MW of projects over the next 24 months, but also enables the company execute most of the Rs 28,000 crore of EPC (engineering, procurement and construction) contracts on hand,' Lanco chairman L Madhusudhan Rao told ET. 'Cost overrun of nearly 30 per cent in these four power projects...was largely on account of forex changes and interest during construction, forcing us to stall them for over 24 months.'

ET