REC, NTECL to invest Rs 2,114 crore in plant

Rural Electrification Corporation Ltd (REC) today signed a memorandum of understanding (MoU) with NTPC Tamil Nadu Energy Company Ltd (NTECL), a joint venture between NTPC and Tamil Nadu Electricity Board (TNEB), to invest Rs 2,114 crore in the Phase-II development of the latter’s greenfield power project at Vallur in North Chennai.

In the second phase development, the company will set up a 500-Mw plant at an investment of Rs 3,796.48 crore, and the state-run power financing firm is funding the entire 70% debt portion of the project.

As part of the Phase-I development, NTECL is setting up two units of 500 Mw each at an investment of Rs 5,423 crore. Of the total project cost, 30 per cent is met by equity and the balance 70 per cent through debt. REC has already sanctioned the entire debt portion of Rs 3,796.48 crore for Phase-I.

“Pre-commissioning is expected to commence in March or April 2011 and by December 2011, both the units will go on full production,” said N Suriyanarayanan, chief executive officer of NTECL.

The third unit is expected to commence operation in November 2012, and TNEB is expected to get 1,125 Mw from the total project, said Suriyanarayanan.

P Umashankar, chairman & managing director of REC, said that the corporation has sanctioned Rs 16,997 crore to implement 5,200-Mw thermal power generation projects in the state. Apart from the Vallur project, the corporation sanctioned Rs 3,437 crore to NLC Tamil Nadu Power Ltd, a JV between Neyveli Lignite Corporation and TNEB, for setting up a 1000-Mw power plant at Tuticorin. According to C P Singh, chairman, TNEB, the state has decided to purchase 2000 Mw of power from the open market. as it is facing a power shortage of 1,600-1,800 Mw.