- Country: India
- Industry: Energy, Natural Resources, Mining
- Stage: Start-up
- Investment size: $10,000,000 / min. $2,000,000
The aim of this project is to produce cost effective hydel electricity in the state of Himachal Pradesh, India as Himachal Pradesh is having a hydel pontential of up to 20000mw and the energy demand is always increasing. The project idea is to receive allotments from the state government of Himachal Pradesh to start micro hydel power projects across the state.
Micro hydel power production can be considered one of the highly profitable and secured ventures in today's market as the state government itself does purchase hydel power from entrepreneurs or local companies. Therefore, a Power Purchase Agreement is to be signed with the government's nodal agency. The government makes allotment of hydel power projects to the entrepreneurs for 20 years and after that takes them over. Since the energy demand is ever increasing in the world today this product is undeniably having a long term competitive edge over other consumable products.
The total investment required for this micro hydel power project of 5mw is US$10 million, out of which US$5 million will be used for construction of roads and buildings, US$4 million for purchase of machinery, and US$1 million for salaries (engineers, labourers and other staff), electricity bills, various govt. clearances such as forest clearance, revenue clearance, and local govt. bodies such as Panchayats. We need this for 3-4 years until the project is actually commissioned and electricity sale to the govt. starts.
The monthly revenue (estimated) can be as follows:
500000 total electricity units, bringing monthly revenue of US$100000 and an annual revenue of US$1200000.
Whereas our total investment shall be US$10000000 we are presently urgently looking for US$2000000 ONLY to be invested with the Sai hydro power foundation. We consider the JV a priority deal as this is a very big company of repute that is already running over 40 micro hydel power projects in the state of Himachal Pradesh.
We can pay up to 5% interest rate provided we get long term funding. We can start repaying the loan after 3 years. In addition, we can offer profit share to the international potential investors as per mutually agreed.
The Sai Foundation, based in Shimla, Himachal Pradesh, has expressed interest in establishing a joint venture with us with regard to its running hydel power projects, and we are interested in this offer as it will help us avoid the gestation period of 3-4 years. A JV will actually take to commission the micro hydel power project and help us avoid cost escalation. In JV with this foundation, we shall be able to produce hydel electricity in a year and guarantee the start of the sale service with the government. We need the additional funding to purchase ISO certified machinery and cover the tower construction infrastructure maintenance and over expenses.
Hydel electricity is cost effective and the product is itself a proof of the fact that energy demand is always increasing. So, it definitely has a competitive edge over other products in the market. Moreover, the State Govt. itself does purchase power from the local companies. Since the demand for electricity can never come to an end we can say that this product definitely has sustainable advantage over other perishable products.
Rationale for the deal
We are 100% sure that we are going to make money out of this opportunity as we have finalized the deal for JV with Sai foundation, which is already producing hydel electricity out of its 40 micro hydel projects. Furthermore, there are over 200 companies making huge money out of hydel power projects.
Use of financing
As already said, we are urgently looking for US$2 million for the construction and completion of road and buildings, and the purchase of machinery. We shall need the remaining amount at a later stage.
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