Neyveli May Signal Ongcs Power Foray

The Oil and Natural Gas Corporation (ONGC) may enter the power sector through a joint venture project to be established near Neyveli in Tamil Nadu.

ONGC has expressed its keenness to participate in the lignite-based power project with an investment of 26 per cent equity. The project will be set up near Neyveli, in South Arcot Vallalar district by Tamil Nadu Industries Captive Power Company Ltd (Ticapco) and BSES.

In a letter to Ticapco, N Lal, the regional director and head of ONGC-JVG, has said that ONGC was interested to participate in the Rs 1,000 crore joint venture subject to power purchase agreement and approval of ONGC board and other government of India agencies. It said the proposed project would require financial appraisal and technical re-evaluation through reputed agencies and also the re-validation of government approval.

 

ONGC officials had discussions in this regard with BSES and G M Swamy Associates (an agency of Ticapco), the letter said. ONGC had suggested that the project could be pursued through two independent joint venture projects.

Power project should be pursued by Ticapco, ONGC, GMSA and other consumers while mining project should be pursued by Ticapco, ONGC, Gujarat Mineral Development Corporation (GMDC) and other mining right holders. The mining project would enter into long-term sale agreement with power project and in turn the power project would enter into a long-term agreement with the mining project to ensure supply of lignite fuel.

The letter said that GMDC has shown interest in mining in the area which has abundant lignite resources. The signing of PPA with various consumers and the likely mode of payment (consumer will pay to Ticapco directly) was also discussed. The Tamil Nadu Electricity Board would receive 10 per cent in kind as wheeling charges, the letter said.

The project would be located at 10,000 acres of land. The power would be supplied at the rate of Rs 2.65 per unit to the industries holding shares in the company, G M Swamy of GMSA said. BSES had agreed to invest 60 per cent equity shares in the 250 mw project, (to be extended to ultimate capacity of 1,250 mw) which was likely to be commissioned by 1999, Swamy said.

The project had received all necessary government approvals, including pollution control board and environment departments, Swamy said.

He said that several Indian and foreign companies like L&T and Samsung had shown interest for construction and engineering contracts at the plant.