Unocal Inc, the $ 11 billion American power utility, has won the mandate to partner Karnataka Power Corporation Ltd (KPCL) in setting up a 300 mw naphtha-based power project near Bangalore.
KPCL, a state agency, had called global bids for the Rs 900 crore project and received 40 offers from international and domestic companies. A shortlist of eight firms was drawn up for the final round which contained Unocal, Electrogen of the US, Rolls Royce of the UK, and the Essar group of the Ruias.
We picked Unocal of US after considering the views of our consultants and other experts, K Jairaj, managing director of KPCL, told Business Standard. A new joint venture company called Bidadi Power Company Ltd is being formed with the concurrence of the state government.
Unocal has agreed to pick up a 25 per cent stake by pumping in Rs 75 crore. KPCL will hold 25 per cent; the remaining Rs 150 crore will be raised from the primary market and firm allotments, said Jairaj.
The new combined cycle power project has since been granted a naphtha allocation that will meet 70 per cent of its requirements. The company will 1400 tonnes of naptha per day to operate at the optimal level.
Said Jairaj, We will tap overseas market to meet the rest of our requirement and plan to use spot buying to get a better deal.
The company plans to raise Rs 600 crore from the debt market.To ensure that there is no cost escalation or huge interest burden, we could even use term loan if rates are advantageous, said Jairaj.
The new company has since obtained 169 acres of land near Bidadi, which comes under the constituency of HD Kumaraswamy, son of former Prime Minister H D Deve Gowda.
Karnataka Industrial Area Development Board (KIADFB) has already completed the process of acquiring land having paid Rs 7 crore as compensation to landowners, Jairaj said. We have taken utmost care to ensure no hurdle comes our way once we go for financial closure, he added.
The 300 mw project has been split into two components: a 200 mw combined cycle unit, and a 100 mw single cycle using the steam recovery process to ensure that the fuel cost is under check. The advantage of using a 100 mw steam recovery route is that the unit is ready to meet any peak demand.
It is a unique project being close to the load centre, said Jairaj, adding that the resultant impact could be felt in the lowest possible transmission and distribution (T&D) losses.
In India, T&D losses hover between 19 to 24 per cent. The new project hopes to hold down T&D losses to a single-digit level which result in enormous savings for the company.
The joint venture partners hope to start electricity generation in 20 months from the day of financial closure which is when the loans and all other attendant financial agreements are tied up.
Jairaj says the two partners have completed technical studies and have assured the state government that there will be no time or cost escalations from the zero date.
Meanwhile, KPCL has launched a new deposit scheme called Vidyut Jyoti scheme which carries an attractive rate of interest to raise funds for its on-going projects.
Jairaj says a sum of Rs 100 crore will be earmarked for Bidadi power project to ensure a smooth flow of funds to Karnatakas first fuel-based power project.
