Mumbai-based power company BSES and the public sector Gas Authority of India (GAIL) have decided to enter into a joint venture for setting up gas-based power projects in the country. Confirming the move, BSES chairman and managing director R V Shahi said that GAIL had recently received the nod from the ministry of petroleum to go ahead with the venture. He, however, declined to give further details. Under the guidelines of the Union government PSUs have to seek permission from their parent ministry before they go ahead with a joint venture.
BSES will hold the majority stake of 51 per cent. The two companies are currently planning to set up a gas-based 500 mw project near Delhi.
The two companies have also applied to the Delhi government seeking to manage the distribution as well. Sources said that this would make the project more bankable.
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Due to the poor financial health of state electricity boards (SEBs) power project developers are seeking various comforts. The commonly sought ones are an escrow account and a state government guarantee. Currently, the demand for escrow cover outstrips supply, and state governments have also become wary of providing any additional guarantees.
The joint venture is keen on distributing power as well as this will help it be in a position to collect dues directly from customers instead of it being routed through the SEBs. This will give comfort to lenders, sources said.
Sources also said that the joint venture will next turn its attention to Gujarat. BSES presently operates a 500 mw coal-based plant at Dahanu in Maharashtra. It is also planning to set up another 495 mw gas-fired plant at Palghar in the state. The company which has chosen the joint venture route to set up various power projects in India. BSES Kerala Kochi Power (BKKPL) is setting up a 160 mw power project at Kochi. One of the partners in the joint venture is Kerala State Industrial Development Corporation. The project recently attained financial closure.
BSES-Ticapco is setting up a 250 mw coal-based project at Srimushnam near Neyveli in Tamil Nadu. Ticapco is consortium of textile companies based near Coimbatore in Tamil Nadu. BSES holds at least 51 per cent in all these joint ventures. The company burnt its figures when its management contract with Grid Corporation of Orissa (Gridco) was abruptly terminated in 1997. After that BSES has made a policy decision only to enter into those joint ventures where it can hold controlling stake.