Rosa Power, UP Govt in captive mining tie-up

Rosa Power Company (RPC), an Aditya Birla group company, and the Uttar Pradesh government have reached an agreement on floating a joint venture for captive mining for the 567 MW (2X283.5 mw) coal-based thermal power project, to come up on the Lucknow-Delhi National highway in Shahjahanpur.

The long-awaited project is likely to achieve financial closure by March next year and construction is likely to begin soon after. The UP government has accepted the company's representation on revisions of the power purchase agreement (PPA) and the executive agreement it signed with the then UP State Electricity Board in September 1998 and February 1999, respectively.

Fresh PPAs are likely to be signed this week and ratified by the state power regulator next month. The RPC was first mooted in 1993.

The proposed JV will bid in the captive mining block auction by the Union coal ministry soon in Jharkhand and Chattisgarh and the mines under Northern Coalfields Ltd. This proposal has also been approved by the UP cabinet. In the proposed JV, UP Power Corporation Ltd, will hold 26 per cent equity while RPC would hold the remaining 76 per cent.

The JV is being floated to ensure fuel security for the Rosa thermal plant, which would annually need 2.7 million tonnes per annum (MTPA) of coal.

With the present coal linkage available to the Rosa plant, the coal ministry would be able to supply only 80 per cent of the requirement. With this quantity of coal the Rosa plant can operate only at 68.49 per cent of its capacity. The JV will ensure that the plant operates at 80 per cent of plant load factor.

RPC has a long-term coal linkage of 2.7 MTPA from the Ashoka block of the north Karanpura coalfields of Central Coalfields Ltd (CCL).

The representation by RPC for the revision of PPA and Execution Agreement, as per the guidelines of Central Electrical Authority in force from April 2004 and the new energy policy of UP government enforced since June 2004, has also been accepted by the state cabinet.

The UP State industrial Development Corporation in 2000 had acquired 595 hectares of land in Shahjahanpur district. The land is likely to transfer to RPC soon.

In another decision facilitating the Rosa thermal plant the cabinet approved an amendment in the energy policy 2004. The earlier policy focused only on gas-based thermal plants. The life span of a gas-based plant is 20 years while that of a coal-based plant is 30 years.

The cabinet has also granted its approval for the agreement for water supply to the RPC. This agreement will be signed between the RPC and the state irrigation department. The energy policy of 2004 made no mention of the water requirement of the coal based thermal plants.

Revision of the PPA and the execution agreement as per the provision of the energy policy 2004 would enable the RPC to avail several tax benefits during the stage of construction of plant, procurement of plant and machinery and later maintenance of the plant.

The energy policy also provides for the subsidy on the cost of the land for the project. Reliance Energy Ltd's gas-based plant in Dadri is the first beneficiary of concession in land cost.