Rpgs May Have To Rework Dholpur Ppa Project

The power purchase agreement (PPA) for the RPG groups Rs 2,500 crore power project at Dholpur in Rajasthan may have to be re-opened following the Central Electricity Authoritys (CEA) directive to the promoters to scale down the project cost by over Rs 100 crore.

The Calcutta-based RPG group had proposed to set up the countrys largest naphtha-based project in Dholpur, for which it had signed the PPA with the Rajasthan state electricity board in August, 1996.

As a result of the CEAs directive, the promoters will have to rework not only the PPA, but also the projects techno-economic appraisal submitted to CEA. Sources said that the project will be in trouble if the promoters are unable to absorb the reduction in project cost.

 

Initially, the project was to have an installed capacity of 788 mw. This was, however, reduced to 702.72 mw after the government gave a liquid fuel allocation for only 635 mw.

Official sources said the promoters brought down the number of units without reducing the capital cost of the project. They also indicated that the RPG group was cross-subsidising the Balagarh project in West Bengal with the Dholpur project.

RPG had reduced the project cost for the Balagarh project and increased the same for the Dholpur project. Siemens is the equipment supplier for both the projects.

The PPA and the in-principle CEA clearance for the project was based on a project capacity of 788 mw, which restricted the promoters from reducing the capacity by 143 mw to 635 mw. Based on the liquid fuel allocation, the promoters worked out a figure of 702.72 mw, at which they could recover their fixed costs.

The reduced capacity meant altering the number of units to arrive at 702 mw of capacity.

Initially, the promoters were using six units with an average capacity of 132 mw, which was later increased to 234 mw as the number of units were brought down to three.

Instead of reducing the capital cost of the project (due to a reduction in the number of units), the promoters were seeking a clearance on the same capital cost.

Sources pointed out that once the number of units are brought down, the capital cost as well as the soft costs related to the project too come down.

This includes elements like interest during construction and labour and construction costs. The promoters have already firmed up a cost of Rs 2.9 crore per mw for the project in the PPA.