NTPC, Coal India tie-up for Orissa plant

Application filed for land clearance.

NTPC Ltd may enter into a 50:50 joint venture with Coal India Ltd for setting up a 4,000-Mw power generation plant in Orissa. The plans for the proposed plant have gathered momentum with the application for land clearance being filed.

The JV will be made functional in the form of a special purpose vehicle that leverages the two firms' core competencies.

"We have applied for land clearances for the proposed site in Orissa. As of now, this is the only plant that we are working on with Coal India," a senior NTPC official told Business Standard.

The coal pit-head project will involve an investment of around Rs 16,000 crore, with 70 per cent of it being funded through debt and the remaining through equity. Both companies will put in Rs 2,400 crore as their equity contribution for the project.

While NTPC Ltd will provide the technical know-how and help in the running of the plant, it will be CIL's responsibility to ensure delivery and dispatch of coal to the project.

The power major believes that such an arrangement will facilitate cost-effective operations, besides ensuring availability of coal in the long term.

"As Coal India has an exhaustive supply of coal, it makes sense to join hands with them for a readily available coal supply. This will lead to fuel security in terms of coal quantity as well as the price," the official added. NTPC Ltd buys 100 million tonnes of coal from CIL.

Meanwhile, CIL through its subsidiary Western Coal Field Ltd is planning to enter into a 50:50 joint venture with Nevyeli Lignite Corporation for setting up a 1,000 Mw power project. The project may involve an investment of Rs 4,000 crore.