Neyveli Lignite to go alone on Gujarat power project

May 27th, 2011 - 10:23 pm ICT by IANS  

Chennai, May 27 (IANS) Integrated mining-cum-power producer Neyveli Lignite Corporation Ltd (NLC) is planning to go solo with its power project in Gujarat, scrapping its earlier agreement with Gujarat Power Corporation, a top company official said Friday.

“We are planning to put up a 500 MW power project in Gujarat on our own,” NLC chairman and managing firector A.R.Ansari told reporters here.

NLC and Gujarat Power Corporation signed a deal in 2006 to set up an integrated project in Valia in Gujarat. As per the deal, NLC would hold 74 percent stake in the project and the Gujarat Power Corporation the rest.

Am agreement for mining 12 million tonnes of lignite per annum was signed, and a 1,500-MW power project was proposed to be set up in two phases.

The first phase proposed to mine eight million tonnes of lignite and build a 1,000-MW power plant.

The project hit the block as the Gujarat government wanted the entire power generated for itself, which the central government refused. Any joint venture with a state-run power company requires 57 percent of the electricity generated to be supplied to the national grid.

According to Ansari, at the most, a state can get 75 per cent of the power generated.

There are, however, some exceptions to the rule. For example, in Andhra Pradesh, the entire 1,000 MW of power generated by the National Thermal Power Corporation’s Simhadri project is supplied to the state.

In Rajasthan, the entire 250 MW of power generated by an NLC unit is supplied to the state.

Meanwhile, NLC’s plans of expanding outside Tamil Nadu with power projects in Madhya Pradesh and Orissa hit a road block forcing the company to drop its plans.

“We have dropped our plans in Madhya Pradesh and Orissa,” Ansari said.

According to him, the Orissa government wanted the power company to pay five paise for every unit that was exported.

NLC had earlier announced its plans to set up 2,000 MW power project in Orissa. The company had announced a three way joint venture with Mahanadi Coal Fields Ltd and Hindalco as the other partners.

On dropping the 1,000 MW power project in Madhya Pradesh, Ansari said Nothern Coal Fields Ltd, the proposed joint venture partner, decided against the project as it found the returns were lower than from mining operations.

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