The Southern India Mills' Association plans to set up a
500-mw captive power plant at Tuticorin in Tamil Nadu. The project cost is
estimated at Rs 2,400 crore.
The association will seek help from the state government for acquiring land and
to build a jetty to handle coal imports for the coal-based plant. A special
purpose vehicle will be set up with SIMA holding 51 per cent in the SPV. Other
investors, including IL&FS, have also shown interest in the project.
The association has come up with this project as several textile units have been
leaving the state due to high power costs. The power cost is lower in Andhra
Pradesh (Rs 3.11 per kWh and only Rs 2.35 per kWh for expansion and new units)
than in Tamil Nadu. Power generated from this plant will be supplied to SIMA
members at Rs 2.40 per kWh, which is much lower than the existing rate of Rs
4.20 per kWh.