Two power plants to be set up in Maharashtra

Reliance Energy plans to put up two new power plants in Maharashtra, near the coastal town of Shahpur in Ratnagiri. According to analysts, REL is putting up a 4000 MW gas-based power plant at Shahpur, and a thermal plant with a capacity of 1200-1800 MW.

Company officials said they were looking at sourcing both gas and coal from the international markets for the two plants.

Analysts said the company was likely to come up with the thermal plant first, as coal linkages are easier than gas linkages, to firm up in the international markets.

REL has already started acquiring land for the project and the EPC contract are in the process of given out, they added.

On the Dadri power project, the company is unlikely to complete financial closure until the gas linkages are firmed up. REL has an agreement with Reliance Industries Ltd (RIL) for gas supply at $2.38 per million metric british thermal units (mmbtu), which works out to $3.75 inclusive of all costs including transportation. The agreement which was part of the settlement between the two Ambani brothers is currently in dispute.

Company officials said the company may now be willing to consider a higher fuel cost for the Dadri plant. This could be in the range of $3.5 and $4 per mmbtu, which works out to be between $4.87 and $5.87 per mmbtu for the final costs. However, the company did not indicate whether they were looking at other sources of gas than RIL's KG Basin gas. Analysts also said that the likelihood of the project seeing completion over several years was remote.