Mangalore Power to go on stream this month

The Mangalore Power Company's (MPC) 1,000 Mw project in Karnataka will be the 12th private sector power project to achieve financial closure this calendar year.

The Mangalore project is expected to complete all project-related financial transactions, finalise and close the project's financial accounts, dispose project assets and release the work site this month.

The MPC is jointly promoted by Tata Electric Companies (TEC) and the Hong Kong-based CLP Power International, a unit of CLP Holdings.

The combined generation capacity of private projects, which have achieved financial closure in 2004, is 4,952 Mw, as against the total private sector capacity addition target of 7,121 Mw during the Tenth Five Year Plan period (2002-07).

Among the projects which have achieved financial closure this year are the Everest Power-promoted Malana-II HEP, the only hydro-based station in the list, the 1,000 Mw Torrent-promoted Akkhokola Thermal Power Station in Gujarat and the Jindal Power-promoted Raigarh coal-based plant with 550 Mw capacity.

In contrast, the private sector had added only 7,000 Mw capacity over the last 10 years as selling power to bankrupt state electricity boards (SEBs) made projects unbankable. Initiatives to reform SEBs have also made an impact on their financial health.

The new Electricity Act which allows power developers to sell electricity directly to retail consumers, to trading companies like Power Trading Corporation, or to bulk consumers, has made projects financially viable and encouraged banks and financial institutions to fund these projects.

The power ministry hopes to get financial commitments for over Rs 20,000 crore for the remaining projects. Banks and FIs have committed almost Rs 12,000 crore for private power producers this year at interest rates ranging between 7-8 per cent.

Of the total thermal capacity addition target of 25,417 Mw, the achievement was below target in the first two years of the plan. As against a targeted addition of 3,502 Mw in 2002-03, the achievement was 2,223 Mw. In the next fiscal, the achievement was 1,362 Mw as against the target of 1,437 Mw.

In 2004-05, the thermal programme aims at adding 2,661 Mw to generation capacity.