Cogentrix Seeks To Dilute Stake In Mangalore Power Co

US-based power major Cogen- trix Energy Inc is seeking a buyer for its equity in the Mangalore Power Company, which is putting up a Rs 4,000-crore; 1,000 mw power project in Karnataka.

Many companies have shown interest in picking up the equity. We would sell it to someone who may be in a position to add value to the project, project director Mike Maley told Business Standard yesterday.

Cogentrix holds 60 per cent of Mangalore Power Companys equity. The other 40 per cent is held by China Light and Power International. Although no reason has been officially given for Congentrixs sudden decision to dilute its stake in the controversial project, the new company brass is learnt to be lukewarm to the project which has been hanging fire for the past five years.

 

Apart from the finance ministrys objections to many issues related to the power purchase agreement (PPA), the project is also embroiled in an environmental controversy. Industry sources said Cogentrix is trying to acquire a Central counter-guarantee for the project as soon as possible so that it can get a better price for the equity. A high-level Congentrix team is currently in the capital to discuss counter-guarantee issues with the Union power and finance ministries.

Cogentrix has also asked the government for permission to increase its project cost by Rs 75 crore plus $20 million. The company has argued that the project cost estimates have risen because of inflation since July 1996, when the project received techno-economic clearance from the CEA.

If the government accepts Cogentrixs demand, the fixed cost component of the power tariff would rise, increasing the tariff for power generated at the plant. This, in turn, would push up the price of the projects equity.

Name of project Mangalore TPS

Generating company Mangalore Power Co (promoted by Cogentrix and China

Light & Power International)

Location Nandikur in South Kanara district

Installed capacity 1.000 megawatt

Fuel type Coal (to be imported from South Africa, Indonesia and Australia

Provisional completion cost US$751.57 million (Rs 2367.46 crore) +

(as approved in TEC) Rs 1580.89 crore = Rs 3948.35 crore

Cost of generation Rs 2.29 per Kwh (provisional)

(levelised tariff)

CCFI clearance April 6, 1993

In principle CEA clearance July 27, 1995

Techno-economic clearance July 10, 1996

Environment clearance June 6, 1996

Commissioning schedule First unit in 33 months after notice to proceed and subsequent

units after 36, 39 and 42 months

* US$1 = Rs 31.50