The Anil Dhirubhai Ambani (ADA) group-promoted Reliance Power will soon enter into a power purchase agreement (PPA) with the Uttar Pradesh government for 2456 Mw. This will help the company fast track its 3,960-megawatt (Mw) Chitrangi power project near Sasan in Madhya Pradesh.
Reliance Power, which is setting up over 35,000 Mw of capacity, had emerged as one of the lowest bidders in a competitive bid for purchase of power by the UP government. Reliance Power will supply 2,456 Mw to Uttar Pradesh from Chitrangi. The company had earlier signed a PPA with the Madhya Pradesh government for close to 1,200 Mw, said sources having knowledge of the developments.
For purchase of 3,000 Mw power on a long-term basis, competitive bids were invited by Uttar Pradesh Power Corporation Ltd (UPPCL), the nodal agency of power in the state. Bids were submitted by six companies, of which four — JP Associate, PTC, Lanco and Reliance Power — qualified. Reliance Power offered a tariff rate of Rs 3.702 per unit, one of the lowest.
While Lanco committed 680 Mw at Rs 4.283 per unit, JP Associates and PTC committed 200 Mw each at Rs 3.9 per unit and Rs 4.8 per unit respectively. PTC has also committed to supply another 300 Mw from KVK Neelanchal project at Rs 3.324 per unit and another 160 Mw from Ind Bharat Power project. UPPCL is likely to issue a letter of intent (LoI) to Reliance Power considering the fact that other bidders have offered only nominal capacity in their bids, they said.
A Reliance Power spokesperson declined to comment. Sources said with the PPA in place, Reliance Power can now fast track the Chitrangi project.
According to the agreement, power supplies have to begin within 48 months or by 2014.
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Chitrangi Power Private Ltd (previously Madhya Pradesh Power Generation Private Limited) is a wholly-owned subsidiary of Reliance Power. It is a coal-based 3,960 Mw project at Chitrangi tehsil in Singrauli district in Madhya Pradesh with an investment close to Rs 20,000 crore. The financial closure process for the project has already begun. The project is planned to be financed at a debt-equity ratio of 75:25. The company is also planning to further augment the capacity of this project, said sources.
The coal for the project would be sourced from captive coal mines allocated to Sasan UMPP as well as from linkages which the government may allocate for the project. The approval for using coal from the Sasan coal mines, adjacent to the project has already been given by the government. The land required for the construction activities has been acquired and initial construction activities have commenced, they said.