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<b>Letters:</b> Salboni's flickering fortunes

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Business Standard New Delhi
Last Updated : Aug 24 2014 | 10:59 PM IST
This refers to the report "JSW Bengal says Salboni project hinges on govt support" (August 22). Jindal's Salboni steel project is effectively dead. The promoters now want to build a 600 Mw power plant as an independent power project (IPP) only if the state buys the entire output at cost-plus profit. There are reports that sanctioned power projects have a capacity that is much higher than the supply shortfall, and there is enough scope in India to significantly improve both plant load factor and reduce T&D loss.

The estimated cost of Rs 5,000 crore is more than the normative cost of Rs 3,000 crore for similar-sized units. Further, the project has 4,300 acres of land when a power plant needs 400 acres. The plant's annual need of four million tonnes of coal has to come from a distance. All this means much higher per unit cost that the consumer will have to bear. It seems that Indian promoters need baby-sitting from the government to get a coal lease, iron ore linkage, land acquisition, water, transport and guaranteed offtake. Only then can they engage in an activity that has big tax breaks and the protection of cost-plus pricing. IPPs should be done only on the basis of "least-tariff wins" auction where the consumers benefit from competition.

P Datta Kolkata

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First Published: Aug 24 2014 | 10:03 PM IST

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