Reliance, L&T, GMR in race for 1,980-Mw project

Eight power companies are known to have bid for the 1,980-Mw thermal power project of Maha Tamil Collieries, in Raigarh district of Chhattisgarh.

They are Reliance Power, GVK, Lanco Infratech, GMR, Larsen and Toubro Power, Sterlite Energy, JSW Energy and Indiabulls Power. The cost of the project is around Rs 15,000 crore. It is a pit-head project, where the thermal plant will be located right at the attached coal mine.

The mine, Gare Pelma-II, has 768 million tonnes of reserves, and the project includes developing the mine for a 15 mt annual output.

Maha Tamil Collieries is a joint venture company of the Tamil Nadu Electricity Board and the Mahrashtra State Mining Corporation, each an arm of their respective state governments. TNEB has 77 per cent of the equity and MSMC the rest. The company was registered last year. The joint venture allows the successful bidder to use coal from the mine to put up the power capacity. The developer must, after satisfying obligations to the host state (Chhattisgarh), sell half the remaining power produced to the state electricity boards of Maharashtra and Tamil Nadu. The other half can be sold on a “merchant basis”, meaning to anyone else, though the two boards will have first right of refusal on these, too. And, any extra coal from the mine should be diverted back to the joint venture company.

The bid rules asked for companies with at least three years experience in mining 10 million tonnes in the past three years, either in India or abroad. Bidders who have been selected to develop a coal mine with geological reserves of 250 million tonnes are also qualified.

“The bid qualifications are very strict and very few companies can qualify. But the project has generated huge interest because it is one the biggest power projects seeking bids after the Tilaiya (in Jharkhand) ultra mega power project bids in early 2009,” said one of the bidding companies.

Analysts say pit-head projects have more bidders than those based on imported coal. However, there might also be more rational bids in terms of the rates at which they’d supply power to the state electricity boards.

The Sasan ultra mega power project (in Madhya Pradesh), was also a pit-head power one. The rate bid for was as low as Rs 1.19 per unit.