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Foreign firms line up for mega power projects

April 18, 2006 01:42 IST

A slew of foreign power firms have expressed interest in developing the five ultra mega power projects announced so far.

A senior Power Finance Corporation official said that nearly 20 per cent of the expressions of interest received for the three UMPs, for which bids have been invited so far, had been from foreign players keen to enter the power sector.

These include AES and Khanjee Holdings from the US, Sumitomo, Itochu and Mitsui from Japan, Korea Electric Power Co (South Korea), China Line Power (China), Tronoh Alco Combine from Malaysia, Duncan Machneil (UK) and Electricte De France (France). Already a slew of foreign players have sent EoIs for the western region grid strengthening project, to be commissioned by the PowerGrid.

Other new players who have sent EoIs for the UMPs include Ashok Leyland of the Hinduja group and Aditya Birla Power and L&T Power.

Aditya Birla Power and Ashok Leyland have bid for all the three projects in Sasan in MP, Mundra in Gujarat and Girye in Maharashtra. Indian power majors such as Reliance Energy, Tata Power, Torrent and Essar have also bid for all the three projects.

Speaking at the bidders' conference for the Girye UMP in Sindhudurg district in the state, Union Power Secretary R V Shahi said the ministry was mulling over such issues as fuel indexation, coal prices and forex linkages.

He, however, clarified that the equity component could not be forex-linked. The projects which are expected to cost around Rs 15,000 crore will have a 26 per cent (Rs 3,000 crore) equity component.

The power secretary also said the qualifying norms would not be relaxed any further. Recently, the ministry had said the bidder or its parent company should have made a capital investment of Rs 3,000 crore in 10 years, in addition to having invested in a single project of Rs 500 crore.

Shahi clarified that in case that the bidder is a special purpose vehicle, then the parent company should have a 26 per cent equity with effective management control.

Shahi also clarified that the government would not provide any payment security mechanism. Rather, the security would come from an irrevocable letter of credit to be signed between the generator and the buyer. And in case the buyer was not able to pay the tariff, the generator would have an open access to sell directly to high tension consumers.

Rakesh Nath, chairman, Central Electricity Authority, said the project site identified for Girye was spread over 3,500 acres of flat rocky land near Vaghothan river in the Sindhudurg district. The unit size of the project would be around 660 to 1,000 mw. PowerGrid is putting up a transmission line to evacuate power from the plant, he said.

The states getting a share of power from Girye included Maharashtra, Rajasthan, Gujarat, Chattisgarh and Karnataka.

Gayatri Ramanathan in Mumbai
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