Reliance Power has tied up loans of $1.1 billion (over Rs. 6,000 crore) from three Chinese lenders for its upcoming 3,960 MW Sasan Ultra Mega Power Project in Madhya Pradesh.

The State Council of Government of China has granted the final approval for Chinese banks to finance the project.

Approvals have also been granted by Ministries of Finance, Foreign Affairs and Commerce, sources said.

When contacted, a Reliance Power spokesperson confirmed that the commitments from Chinese Banks for long-term loans of $1.1 billion have been received.

“We are happy to have the participation of large Chinese Banks and Sinosure as stakeholders in our prestigious Sasan Ultra Mega Power Project.

“The transaction is a testimony of their confidence in Reliance Power and in the Indian power sector. Project economics will be improved by this financing which is at competitive terms,” the spokesperson said.

These loans would be provided by Bank of China, China Development Bank and The Export Import Bank of China, along with Standard Chartered Bank. The insurance cover would be from China Export & Credit Insurance Corp, sources said.

They noted that it would be the largest financing by Chinese Banks for an Indian project across all sectors.

The long-term loans have a duration of over 13 years.

Sources said the Chinese banks’ financing was to support import of the Boiler-Turbine Generator (BTG) from the Shanghai Electric Group Company Ltd.

According to them, this financing is on project finance basis and the banks are relying solely on cash-flow of the project for servicing their debt.

The Sasan project, being set at a cost of about $4 billion, would start power generation in December, 2012.

The Chinese banks had signed a Memorandum of Understanding (MoU) with Reliance Power to finance $12 billion for its projects in October, 2010.

More In: Companies | Business