Neepco JV plan with Tatas, RIL hits a block

The North Eastern Electric Power Corporation Ltd's (Neepco) effort to form a joint venture power generation company either with Tata Power or the Reliance-owned BSES for a 2,920 MW power project in Arunachal Pradesh has hit a road block with the Cabinet Committee for Economic Affairs (CCEA) reportedly showing its dissent against such move.

Sources said, "CCEA is not likely to allow Neepco form a joint venture company with either Tata Power or Reliance." This means that Neepco will have to go on its own.

S C Sharma, chairman and managing director, Neepco had earlier said that the company intended to be a majority partner in the proposed JV and that if the private sector companies did not agree, it would go on its own.

Neepco had entered into talks with Tata Power and BSES for four units with a total generating capability of 2,920 MW. With average cost of 1MW of hydel power plant estimated at Rs 2.8 crore, the total cost of the project was expected to be around Rs 8,400 crore, while the average tariff for the power generated from these plants was estimated at Rs 1.58 per unit.

Asked about the source of funds for the project, if Neepco had to tread the path alone, Sharma had said that the Corporation would use the government grants.

R M Ghosh, director finance, however, said that Neepco intended to raise the required funds for the project from the market and that Corporation was in the process of getting it rated by either ICRA or Crisil. He said the market was preferred because existing interest rate was lower than that provided by the government

Meanwhile, the North East based power generating company, which has a total installed capacity of 1,150 MW has tied up with SBI Caps for raising Rs 800 crore in its endeavor to take up new projects.

A consortium of 13 banks has joined has doled out Neepco the amount. The company is also expecting a net profit of Rs 160 crore for the year 2003-04.