Reliance to set up 3,500 MW plant in UP

The Reliance group announced its plans to set up a 3,500 MW gas-based power plant in Uttar Pradesh at a cost of Rs 10,000 crore ($2.2 billion).

"This will be the world's largest gas-based power project. To the best of our knowledge, the largest gas-based capacity at present is in Japan, which generates a little less than 3,000 MW," Anil Ambani, vice-chairman of Reliance Industries and chairman of BSES Ltd (soon to be renamed Reliance Energy Ltd), said at a press conference here after a meeting of the Uttar Pradesh Development Council.

The power plant will use gas from the Dhirubhai Ambani gas field of Reliance Industries in the Krishna-Godavari basin. This gas will be first brought to Hazira in Gujarat and then fed to the proposed power plant using the HBJ pipeline.

According to Ambani, of the 60 million cubic metres per day capacity of the gas field, 10-12 million cubic metres will be used in this project.

Ambani said the project would generate power at roughly Rs 2 per unit. "This is substantially lower than the cost at which a large number of plants in the country are operating," he added. With a capacity of over 1,000 Mw, the plant qualifies for the status of a mega-project, which should fetch it substantial import duty benefits.

To be developed in phases "" each module will be taken up after a gap of six months "" the plant will be the country's largest power generating capacity at a single location. At the moment, four sites in the state are being considered for the project. The plant will be spread over 2,500 acres. The first phase would be completed within three years of the zero date, Ambani said.

The cost of the project would be met through a combination of debt, domestic as well as international, and internal accruals of the group, Ambani added.

When asked if the project would be implemented by Reliance Industries or BSES, Ambani said it would be a Reliance group project. "While the gas will come from Reliance Industries, the domain knowledge in power is with BSES," he added.

As regards the sale of power from the plant, Ambani outlined three avenues: sale of power in Uttar Pradesh through distribution integration now that the government had decided to unbundle generation, transmission and distribution of power; sale to BSES customers in Delhi and Mumbai; and trading in power. "There is a peak shortage of 2,000 Mw in the north, with a shortage of 1,200 Mw in Uttar Pradesh alone," he added.

The proposed investment would make Reliance the biggest investor in Uttar Pradesh, Ambani said. "This is the first large investment announced after the Electricity Act, 2003, was passed," he added.