Rs 1800cr Fdi In Cuddalore Power Project Cleared

The Foreign Investment Pro-motion Board (FIPB) has approved foreign direct investment worth Rs 1, 796 crore in the Rs 5,500 crore Cuddalore Power Project in Tamil Nadu.

The foreign investment in the project amounts to 95 per cent of the total equity. UK-based GEC Alsthom , US-based International Contracting Marketing Corp and Unisphere of Malaysia are the foreign investors in the 1320mw coal-based thermal project. GEC will be the technical collaborator for the project.

The proposal is now with the Cabinet Committee on Foreign Investment for its approval. It had earlier been put on hold, pending clarifications on the ash content in coal to be used by the company. Sources indicated that the company initially wanted to use imported coal. However, the Tamil Nadu State Electricity Board forced the company to switch to local fuel to minimise tariffs.

 

Guidelines issued by the ministry of environment and forests have set an ash content ceiling of 34 per cent. However, the promoters were willing to buy locally-available coal only if the ash content did not exceed 30 per cent.

The FIPB has cleared the FDI proposal as the promoters have dropped this demand. However, the Union ministry of petroleum and natural gas has stipulated that the power company will have to apply for secondary fuel allocation. Secondary fuel, which is usually liquid fuel, is used in all thermal power plants to maintain flames at a steady level.

The FIPB also cleared GVKs proposal to increase foreign equity from 85 per cent to 100 per cent in its 120 mw diesel power project at Ratlam in Madhya Pradesh. Wartsila Diesel of Finland will now hold 10 per cent and 90 per cent will be offered to NRIs, OCBs overseas banks and companies and FIIs.