Wartsila to invest Rs 105 cr in MP power plant

Wartsila India Ltd, which has been reportedly given approval to buy equity in Madhya Pradesh-based Malanpur Captive Power Pvt Ltd (MCPPL), is now negotiating with the MP government for concessions, sops and loan arrangements for setting up a 26.19 Mw power plant in the Malanpur (near Gwalior) industrial area.

"The new company, MCPPL, will set up the power plant, which will cost Rs 105 crore. Wartsila would have 74 per cent equity partnership while local industries would have a 26 per cent, in the Malanpur Captive Power Pvt Ltd (MCPPL), highly-placed government sources told Business Standard today, adding, "big firms like Cadbury India, Surya Roshni and Hotline have picked the 26% stake in the firm. These firms are already operating in Malanpur Industrial area. The company has demanded some sops and concessions. The Apex Empowerment Committee on Investment is mulling over these concessions and sops in accordance with the industrial promotion policy 2004."

Wartsila has demanded special incentives of Rs 25 lakh as a capital subsidy, entry tax exemption and to consider the project in thrust sector. Further the company has demanded exemptions on electricity duty for 15 years and similar exemptions on cess. The firm has urged Madhya Pradesh State Industrial Development Corporation to arrange loans for the project.

"We have issued a letter of intention regarding land acquisition to the firm against its demand of an area of 10 acres. The firm has yet to deposit amount for the land," the official said. The equity partners of Malanpur have agreed to purchase 90% power generated from the project. But the state government may also purchase surplus power, if any.

A wholly owned subsidiary of Finland-based Wartsila Corporation, the Wartsila India Ltd., has presence in India since 2003 in gas engine-based power generation. The Malanpur gas based power project will have supply from Gail India. Wartsila India had last year signed a deal with GAIL India for supply of natural gas at Malanpur for the captive power plant. "The gas supply is expected to commence in June this year."

Earlier Wartsila had proposed the project in Pithampur industrial area also for a total of 120 MW power generation in Madhya Pradesh. Later after gas supply hurdles, the project is reportedly on backburner.