The Andhra Pradesh government has instructed BSES Andhra Power Limited, a subsidiary of power major Bombay Suburban Electric Supply (BSES) Ltd, to alter its 220 MW Samalkott power project, estimated to cost around Rs 720 crore.
The state government has asked the power major to change the fuel from naphtha to liquefied natural gas (LNG) and alter the power tariff accordingly.
BSES officials said that the AP government feels that on a long term basis LNG will be the ideal fuel for the power project. The earlier plan was to start the project with naphtha in the initial two years and later convert into LNG, but the government has now asked BSES to start the project with LNG.
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They said with the change in the fuel, the power purchase agreement (PPA) which the government had signed around two years back has to be amended. Sources said though there won't be major changes in the PPA, there will be considerable changes in the tariff structure. They said the BSES has already initiated talks with Gas Authority of India Limited (GAIL) for the supply of LNG.
BSES had tied up with banks and financial institutions around one year back and the project was supposed to achieve financial closure early this year. The state government's new stand has again delayed the process and the project will now achieve financial closure only by next month. They said around Rs 120 crore worth of power equipment has already been shipped to Samalkott. Italy-based Ansaldo is the contractor for engineering procurement and construction of the project.BSES will be appraising the financial institutions about the revised structure by the end of the week.
In the Samalkott power project, BSES has a 70 per cent stake while the remaining stake is with SEW Constructions and Prasad & Company, two of Andhra