Lanco Infratech wins 3,300 mw power projects in UP
PM Research Bureau
In a major boost to its power business, Lanco Infratech Ltd
has emerged as the lowest bidder for two mega power projects - Prayagraj and
Sangam - in Uttar Pradesh aggregating 3,300 mw. Lanco quoted Rs 2.88 per kwh for
the 1,980-mw Prayagraj and Rs 2.838 per kwh for the 1,320-mw Sangam project,
outbidding other contenders like Reliance Power (Anil Ambani Group), NTPC Ltd,
CESC Ltd and Jindal Steel & Power Ltd. Bids were opened on April 11, 2008.
Lanco expects to invest Rs 14,000 crore in the two projects, both in Allahabad
district. Financing will be done on a debt-equity ratio of 4:1. With this, the
Lanco Group's power portfolio has risen to 14,000 mw including projects under
development. The Uttar Pradesh government will receive 90 per cent of power
generated from the two plants while Lanco can sell 10 per cent in the market.
The formal letter of award will be issued in the coming weeks, while the
projects are expected to commission within 48 months from zero date.
Tariff-based bidding: The Prayagraj and Sangam projects represent Uttar
Pradesh's initiative of developing power capacity through the competitive
bidding route. State-owned power generation company Uttar Pradesh Power
Corporation Ltd and distribution entities in 2007 invited bids for developing
the two projects where the developer would be selected depending on the
levelised tariff offered. Two special purpose vehicles, Prayagraj Power
Corporation Ltd and Sangam Power Corporation Ltd, have been formed to develop
these projects. Currently, these are wholly-owned subsidiaries of the UP
government and would be transferred to the Lanco Group. The state government
will assist in land acquisition, establishing coal and water linkages, securing
clearances, etc. In the competitive bidding guidelines verbiage, this is
referred to as Case 2, which is also the system followed for the Centre's ultra
mega power project series for which Power Finance Corporation is the nodal
agency. Lanco will develop the projects on build-own-operate (BOO) basis for the
lifetime of the power projects, usually taken as 25 years.
Lanco in UP: The two projects have strengthened Lanco's power portfolio in Uttar
Pradesh. In September 2006, Lanco won the letter of acceptance from Uttar
Pradesh Rajya Vidyut Utpadan Nigam for the 2x600 mw Anpara-C coal-fired power
project in Sonbhadra district. This, according to industry sources, is India's
first ever project to be awarded under tariff-based competitive bidding.
Energy scene: Uttar Pradesh in 2006-07 faced an energy shortage of 16 per cent
with the 48,245 Gwh generated falling short of the estimated demand of 57,444
Gwh. In the same year, there was an 18 per cent deficiency in meeting the peak
power requirement of 9,184 mw.
[April 14-20, 2008]