Neyveli in power plant, mining plan

Neyveli Lignite Corporation Ltd (NLCL) will set up a Rs 1,368 crore power plant cum lignite mining project following a go ahead from the power ministry.

Officials from the company said the cost of the power plant, which will have 2 x 125 mw capacity, would be around Rs 1,100 crore, while the lignite mining project would cost the company around Rs 254 crore.

"We are evaluating various options for sourcing the funds for the project and would arrive at a decision soon. A portion of the cost would be financed from internal accruals while a portion would be other means which we are evaluating," explained officials from NLCL while talking to Business Standard.

The mining project would be located at Barsingsar and would have a 2.1 million tonne per annum capacity which would be used as feed stock for the power plant.

In a parallel development, NLCL has entered into talks with ONGC for setting up a joint venture lignite gassification plant that would be used to generate power.

The government has already cleared the proposal for lignite gassification a few days back and the company has initiated talks with ONGC for going ahead with the lignite gassification project.

The idea is to initially set up a pilot plant for lignite gassification which would be followed by another prototype 10 to 15 mw power plant. If things go according to plan, NLCL will set up a joint venture with ONGC to under take power generation through lignite gassification.

This would be the first such project in the country and both NLCL and ONGC will have to undertake R&D for the purpose.

Details such as the shareholding pattern and size of the equity capital would be worked out at a later stage, once the pilot project starts running successfully.

Nevertheless, in the next four years the company plans to invest close to Rs 20,000 crore for capital expenditure.

NLCL is looking at the possibility of enhancing its power generation capacity by a total of 1000 mw in Tamil Nadu and by another 1000 MW in Rajasthan in phases of 250 mw each.