Sterlite Energy, part of Sterlite Industries, has decided not to go ahead with an earlier plan to expand its Talwandi Sabo power plant in Punjab’s Bhatinda district.
The project, bagged by the company in a competitive bid during 2008, originally had a project size of 1,980 Mw, with three units of 660 Mw each. Sterlite sought permission in 2009 to add another 660 Mw unit, and operate this on a merchant power basis, where it could sell the power produced in the open market.
It is this merchant unit the company is now not proceeding with. The reason is possibly a problem with coal availability. “Work on the Talwandi Sabo project is progressing as scheduled. The project will now comprise 1,980 Mw as originally planned and we will not build the fourth unit,” the company said, without detailing why.
The original three units are unaffected, the power generated to be purchased by the Punjab State Electricity Board (PSEB), at Rs 2.86 per unit for 25 years. The first 660 Mw was supposed to come up by December 2011; it stands delayed by a year. The other two units are now expected to come up by the end of 2013. The company had, in 2009, raised Rs 10,000 crore of loans for these.
The state government had approved the company’s permission to add the proposed fourth unit and also helped it acquire land for this. Coal linkage for the first three units were to be arranged by the state government; for the expansion by the company.
However, coal linkages to new projects have become rarer after a spell of shortages. “Since March 2009, Coal India has not signed any fuel supply agreement with any generator. Even projects which achieved their commercial operation date in the last two years are not getting their full requirement of coal,” said Debasish Mishra, senior director, Deloitte Touche Tomatsu.