KUALA LUMPUR (March 17): After years of delay, Mudajaya Group Bhd's independent power plant (IPP) project in the central Indian state of Chhattisgarh seems to be making some headway.

The plant has a total capacity of 1,440 megawatts (MW) consisting of four generating units of 360MW each with the development phases comprising Phase 1 (Unit 1) and Phase 2 (Units 2, 3 and 4).

In a filing with Bursa Malaysia today, Mudajaya said that under Phase 1, RKM Powergen Private Ltd had signed a 25-year power purchase agreement (PPA) with several power distribution companies in Chhattisgarh on March 15 for the sale of 250MW of power.

Mudajaya said commercial delivery is targeted for October this year.

"However, both parties are in discussion for an early supply of electricity as allowed under the PPA, and RKM is confident that in anticipation of the higher demand for power during the summer period, Unit 1 will commence commercial delivery soon," it added.

Mudajaya holds a 26% stake in RKM, with the controlling 74% stake owned by India-based RK Powergen Pvt Ltd.

Mudajaya said RKM confirmed yesterday that Units 1 and 2 are ready to commence the sale of power, having achieved the commercial operation date.

The company said negotiation for the PPA for Unit 2 is in progress and is expected to be concluded soon while work on Units 3 and 4 are still in progress.

"The successful commissioning and commercial operations of Units 1 and 2 mark a significant milestone for the Group's participation in the power sector in India after lengthy delays," it said.

However, Mudajaya also noted that RKM is still in the midst of renegotiating terms with relevant parties for the sale of power to the Chhattisgarh State Electricity Board and PTC India Ltd, which have yet to be finalised.

The commissioning of the plant, initially planned for 2013, had missed several deadlines after RKM and Coal India Ltd signed fuel supply agreements in September and October of that year.

Under the agreement, RKM would buy six million tonnes of coal per year from Coal India at US$25 per tonne.

However, several issues in the supply and transport of the coal as well as the construction and synchronising of the power plant with the grid led to a delay in the completion and commissioning of the first phase of the project.

The completion date was subsequently deferred several times, with the latest deadline by the end of 2015.

The project's construction cost amounted to RM4.8 billion.

Absence of income revenue from the India project, coupled with cost overruns from some of its Malaysian projects, had dented Mudajaya's earnings since financial year 2012.

In financial year 2014, Mudajaya slipped into the red — the first time since it was listed on Bursa Malaysia in 2004 — with a net loss of RM70.2 million.

Its share price has been on a downward trend, falling from RM2.90 early last year to a six-year low of 85 sen in mid-August 2015.

It has since regained some ground. Yesterday, it closed unchanged at RM1.17, with a market capitalisation of RM629.93 million.