REC signs pact with NTPC Tamil Nadu Energy

Rural Electrification Corporation Ltd (REC) on Saturday signed a memorandum of understanding (MoU) with NTPC Tamil Nadu Energy Company Ltd (NTECL), a joint venture company set up by NTPC and the Tamil Nadu Electricity Board (TNEB), to fund a power project in North Chennai.

Speaking to reporters after signing the MoU, N Suriyanarayanan, chief executive officer, NTECL, said the company was setting up a 2X500 Mw greenfield power project at Vallur in North Chennai. The project in Phase I entails an investment of Rs 5,423 crore.

Of the total project cost, 30 per cent is being met by equity and balance 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.”

Suriyanarayanan said one more unit of 500 Mw power plant would come up at the same site with an investment of Rs 3,020 crore, for which REC has sanctioned the entire debt portion of Rs 2,114 crore. The third unit is likely to commence operation in November 2012 and TNEB is expected to get 1,125 Mw in all.

REC chairman and managing director P Uma Shankar said the corporation had sanctioned Rs 16,997 crore to implement 5,200 Mw thermal power generation projects in Tamil Nadu in the recent past. Apart from Vallur projects, the corporation has sanctioned Rs 3,437 crore to NLC Tamil Nadu Power Ltd, a joint venture between Neyveli Lignite Corporation and TNEB, for setting up a 1,000 MW power plant at Tuticorin.

Similarly, another Rs 4,650 crore has been given for setting up the 2X600 Mw North Chennai Thermal Power Project Stage-II and Rs 3,000 crore to Udangudi Power Corporation Ltd, a Bharat Heavy Electrical Ltd-TNEB JV, for a 1,600 Mw super critical thermal power project at Udangudi in Tuticorin district.

However, the project is facing two major issues including environment clearance from the Centre and coal-linkage, since it comes under the 12th Five Year Plan (2012-17). “We have requested the government to look at the project as a special case,” TNEB chairman CP Singh said.

The state government has decided to purchase 2,000 Mw from the open market to overcome the shortage, which is around 1,800 Mw.