Indian Metals & Ferro Alloys Ltd (IMFA) is planning to spend Rs 6,600 crore over the next five years to set up a 1,320-Mw power plant in Orissa.
With this, IMFA, which currently produces power for its own captive use as a part of its backward integration strategy, will become a commercial power generator. The company is India’s largest producer of ferro alloys, used in manufacturing of stainless steel.
“We have proposed the government set up a 1,320-Mw independent power plant, with two units of 660 Mw each. This will be done through a special purpose vehicle (SPV), fully owned by IMFA, called Utkal Power Ltd,” managing director, Subhrakant Panda, told Business Standard.
“We would have sufficient cash flows to fund the entire equity ourselves. But as a derisking exercise, we may consider some fund raising at the subsidiary level in future for the plan, which is at a preliminary stage at present,” he said.
IMFA produced 180,000 tonnes of ferro chrome in 2010-11 from five of its six arc furnaces at Cuttack and Choudwar in Orissa. It operates 108 Mw captive power generation capacity, as electricity accounts for 40 per cent of the cost of production. It would expand its captive power capacity to 258 Mw by March 2012.
“We will have some surplus power from the three captive units in the short term, which will be sold to the grid. But in the long-term, as we add more furnace capacity, we would use up the entire captive power ourselves. But the entire production from the 1,320-Mw plant would be sold in the market,” Panda said.
The company is hopeful of obtaining all the necessary approvals for the plant by the end of this year, after which it would take five years to commission the project. Coal for the thermal power plant is expected to be secured through linkage granted by the Orissa government.