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<b>Letters:</b> Salboni's flickering fortunes

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Business Standard New Delhi
This refers to the report "JSW Bengal says Salboni project hinges on govt support" (August 22). Jindal's Salboni steel project is effectively dead. The promoters now want to build a 600 Mw power plant as an independent power project (IPP) only if the state buys the entire output at cost-plus profit. There are reports that sanctioned power projects have a capacity that is much higher than the supply shortfall, and there is enough scope in India to significantly improve both plant load factor and reduce T&D loss.

The estimated cost of Rs 5,000 crore is more than the normative cost of Rs 3,000 crore for similar-sized units. Further, the project has 4,300 acres of land when a power plant needs 400 acres. The plant's annual need of four million tonnes of coal has to come from a distance. All this means much higher per unit cost that the consumer will have to bear. It seems that Indian promoters need baby-sitting from the government to get a coal lease, iron ore linkage, land acquisition, water, transport and guaranteed offtake. Only then can they engage in an activity that has big tax breaks and the protection of cost-plus pricing. IPPs should be done only on the basis of "least-tariff wins" auction where the consumers benefit from competition.

P Datta Kolkata
 
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First Published: Aug 24 2014 | 10:03 PM IST

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