Bhel rejects stake in MP project

Bharat Heavy Electricals Ltd (Bhel) has refused to pick 15 per cent in proposed 1,000-Mw Malwa thermal power project planned at Donagalia Purni village of Khandwa district of Madhya Pradesh.

In view of the Bhel decision, Madhya Pradesh government yesterday decided to accept whatever was available with the Power Finance Corporation (PFC) and has accordingly approved Rs 810.60 crore share capital for the project to secure Rs 2,730 loan from PFC against its own demand of Rs 3,548 crore loan.

The state government has also decided to provide on-asset security instead of guarantee on loan. It will float ICBs for the project within two years from now.

Earlier, Bhel had evinced interest in the project. Speaking to Business Standard few months ago, Bhel Chairman Ashok K Puri had said Bhel was interested in participating international competitive biddings (ICBs).

The project was conceived as a 2,000-Mw joint venture between Madhya Pradesh and Gujarat government. Both the governments had signed an MoU for a Rs 8,000 crore investment in the project. Later Gujarat government state board had given a cold shoulder to MP Genco"�an MP state power board arm.

The PFC has sanctioned a loan of Rs 2,730 crore to the project by calculating exposure limit of 67.5 per cent of the total cost of Rs 4,053 crore. The state has calculated the project cost at Rs 4,434.69 crore.

The state has already decided to go solo on the project. The Khandwa project will be offered to bidders on turn-key basis on parts where the first part will include boiler, generator and civil work while the second part will include balance of plants.

Baroda-based L&T-Sargent & Lundy Ltd has been appointed consultant in the project. It is likely to be completed by 2011. The project has been allotted coal from given 4.62 million tonne per annum coal from Southern Eastern Coalfield Ltd, Korba.

"The power tariff is likely to be in the range of Rs 2.30-2.60 per unit," a senior official had told Business Standard.