rake db:create giving undefined method `[]' for nil:NilClass

[Dipanjan Patranavis]

My ruby version is 1.8.7
I have installed mysql-essential-5.0.90-win32
and using Fedena 2.3.5

List of all gems installed:
columnize (0.3.6)
declarative_authorization (0.5.1)
fattr (2.2.1)
ffi (1.9.0)
gem_plugin (0.2.3)
highline (1.6.19)
i18n (0.4.2)
metaclass (0.0.1)
mime-types (1.23)
mocha (0.14.0)
mongrel (1.1.5)
mysql (2.8.1)
net-ping (1.6.0)
prawn (0.6.3)
prawn-core (0.6.3)
prawn-format (0.2.3)
prawn-layout (0.3.2)
prawn-security (0.1.1)
rack (1.5.2, 1.0.1)
rack-protection (1.5.0)
rails (2.3.5)
rake (0.8.7)
rbx-require-relative (0.0.9)
rest-client (1.6.7)
rush (0.6.8)
searchlogic (2.5.14)
session (3.1.0)
sinatra (1.4.3)
tilt (1.4.1)
win32-api (1.4.8)
win32-open3 (0.3.2)
win32-service (0.8.0)
windows-api (0.4.2)
windows-pr (1.2.2)
    Installed at: C:/Ruby187/lib/ruby/gems/1.8


When running rake db:create it is giving the following error:

E:\RubyonRails\Fedena\Fedena>rake db:create --trace
(in E:/RubyonRails/Fedena/Fedena)
** Invoke db:create (first_time)
** Invoke db:load_config (first_time)
** Invoke rails_env (first_time)
** Execute rails_env
** Execute db:load_config
** Execute db:create
rake aborted!
undefined method `[]' for nil:NilClass
C:/Ruby187/lib/ruby/gems/1.8/gems/rails-2.3.5/lib/tasks/databases.rake:55:in `cr
eate_database'
C:/Ruby187/lib/ruby/gems/1.8/gems/rails-2.3.5/lib/tasks/databases.rake:31
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:636:in `call'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:636:in `execute'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:631:in `each'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:631:in `execute'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:597:in `invoke_with_cal
l_chain'
C:/Ruby187/lib/ruby/1.8/monitor.rb:242:in `synchronize'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:590:in `invoke_with_cal
l_chain'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:583:in `invoke'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:2051:in `invoke_task'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:2029:in `top_level'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:2029:in `each'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:2029:in `top_level'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:2068:in `standard_excep
tion_handling'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:2023:in `top_level'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:2001:in `run'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:2068:in `standard_excep
tion_handling'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/lib/rake.rb:1998:in `run'
C:/Ruby187/lib/ruby/gems/1.8/gems/rake-0.8.7/bin/rake:31
C:/Ruby187/bin/rake:19:in `load'
C:/Ruby187/bin/rake:19

And the mysql server is running status of which is :
C:\Program Files\MySQL\MySQL Server 5.0\bin\mysql.exe  Ver 14.12 Distrib 5.0.90,
 for Win32 (ia32)

Connection id:          2
Current database:
Current user:           root@localhost
SSL:                    Not in use
Using delimiter:        ;
Server version:         5.0.90-community-nt MySQL Community Edition (GPL)
Protocol version:       10
Connection:             localhost via TCP/IP
Server characterset:    utf8
Db     characterset:    utf8
Client characterset:    utf8
Conn.  characterset:    utf8
TCP port:               3306
Uptime:                 3 hours 58 min 14 sec

Threads: 1  Questions: 17  Slow queries: 0  Opens: 12  Flush tables: 1  Open tab
les: 0  Queries per second avg: 0.001

My database.yml reads like this and is saved in UTF8 format:

development:
      host: localhost
      adapter: mysql
      database: fedena_dev
      port: 3306
      username: root
      password: asd@123

test: &test
      host: localhost
      adapter: mysql
      database: fedena_test
      port: 3306
      username: root
      password: asd@123

production:
      host: localhost
      adapter: mysql
      database: fedena_prod
      port: 3306
      username: root
      password: asd@123
cucumber:
  <<: *test

Warm Regards,
Dipanjan.