BHEL still keen on Udangudi power project

Chennai, April 8 (IANS) Power equipment major Bharat Heavy Electricals Ltd (BHEL) has assured Tamil Nadu government that it would complete the 1,600 MW Udangudi power project by the target date of 2015, a senior official said.

"We have written to the Tamil Nadu government that there will not be any delay in setting up the power project. We have told the state government that the company's production capacity has gone up to 20,000 MW and there will not be any capacity constraints in executing the project," BHEL general manager(Power Sector Southern Region) Anil Kumar Ghosh told reporters here.

Asked whether the company wanted to execute the project as a joint venture partner or as mere equipment supplier Ghosh said: "We are interested in continuing the joint venture and not just as an equipment supplier."

Chief Minister J. Jayalalithaa in February announced the cancellation of the Rs.8,000 crore joint venture, citing the lack of progress after a Memorandum of Understanding (MoU) was signed between the Tamil Nadu Electricity Board (TNEB) and BHEL in 2007.

The state government would fully fund the project, she said adding that it would be executed by TNEB as a state project with imported coal.

In 2008, TNEB and BHEL floated a joint venture company Udangudi Power Corporation Ltd, each taking 26 percent. The balance 48 percent stake was to be contributed by a private player participating in the project or by a financial institution funding the project. The project is yet to get a coal linkage or environmental clearance.

The joint venture partners have invested Rs.32.5 crore each and completed the site levelling activities at the project site.

"It will take at least five to six months for the state government to finalise the terms of contract if it opts out of the joint venture and goes on its own there by further delaying the project," Ghosh said.

BHEL does not have much leverage as the project land is yet to be registered in the name of Udangudi Power Corporation, power sector analysts told IANS.

"The project will get the mega power status if implemented by TNEB which in turn would be eligible for tax and other concessions. The overall project cost may come down by Rs.900 crore which in turn would result reducing the power cost," the Tamil Nadu Generation and Distribution Corporation (Tangedco) official told IANS.