Gujarat Urja Vikas Nigam Limited (GUVNL) is aiming to enter into a long-term power purchase agreement (PPA) with Gujarat State Petroleum Corporation (GSPC) for its upcoming power units.

GSPC’s two power units, one at Pipavav and the other near Surat, are expected to generate about 1,050 Mw of power in the next two to three years, said government sources close to the development.

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GSPC is in the process of setting up a 1,600-Mw gas-based power project at Pipavav and is aiming to sell about 700 Mw to GUVNL initially, government sources said. Its 350-Mw power project near Surat is expected to go on stream in the next two years.

Swan Energy has picked up a 49 per cent stake in GSPC Pipavav Power Company Limited, a special purpose vehicle set up by GSPC along with Gujarat Power Corporation Limited (GPCL). The project is aimed at catering to energy requirements in Gujarat, especially the Saurashtra region.

“Looking at the current scenario, the selling price of power could be in the range of Rs 3.25 per unit to Rs 3.50 per unit,” said an industry expert.

GUVNL is likely to enter into a PPA with GSPC and GSECL in the next one month, once it gets an approval from the regulator Gujarat Electricity Regulatory Commission (GERC), government sources said.

GSPC had signed MoUs at the Vibrant Gujarat Global Investors Summit 2009 for setting up greenfield power projects with a total capacity of 2,000 Mw. The company had identified two sites – one at Banaskantha and other at Vadnagar – for setting up gas-based power projects. However, GSPC has kept the option open of handing over the two projects to some other player and remain a long-term gas supplier to the project, a company official said.

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