Wartsila to set up two power plants in MP

Malanpur and Pithampur chosen for the proposed units

Wartsila India Ltd has proposed setting up two power plants in Madhya Pradesh. According to sources, the firm is planning to set them up in Malanpur and Pithampur (Indore special economic zone).

The plant in Pithampur will be of 120 Mw, while that of Malanpur 60 Mw.

State government sources told Business Standard the Gas Authority of India Ltd would supply gas to both the plants.

Company officials were not available for comment.

MP State Industrial Development Corporation Managing Director Raghav Chandra told Business Standard, "We (MPSIDC) will be the facilitator in both the projects."

Wartsila India, the Indian arm of the Finland multinational, is a leader in medium-speed diesel engines and gas engines for captive and marine applications. It is looking at a host of new thrust areas to revive its India operations.

Though independent power projects (IPPs) have failed to get off the drawing board since power distribution reforms have not made much headway in Madhya Pradesh, companies have shown interest in setting up power plants in the state.

However, a highly-placed source in the state secretariat told Business Standard: "After Uma Bharti's exit, none is coming foeward to discuss power plants. They can set up power plants, but who will purchase the power?"

Cash-strapped Madhya Pradesh State Electricity Board is also finding it difficult to negotiate with power companies, the thorny issue being rates.

"The gap between the average cost of supply, which is Rs 3.50 per unit, and the average realisation, which is Rs 2.50"�2.60 per unit in the state, is the main hurdle for new power plants," said a government source.

A source further said, "The average realisation should be increased, which is a difficult task."

The government will have to do away with subsidies, which means the rural and other sectors will have to pay for power.

At present, power is available at around Rs 3.15, against the promised tariff of Rs 2.30.

"Companies will skip the Indore SEZ if regular and cheap power supply is not ensured," a power expert said.