The Hindu : Tamil Nadu / Chennai News : Tamil Nadu Government gives nod for five merchant power plants

Online edition of India's National Newspaper
Wednesday, Dec 26, 2007
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Tamil Nadu

Tamil Nadu - Chennai

Tamil Nadu Government gives nod for five merchant power plants

T. Ramakrishnan

Their total capacity will be 10,140 MWs
All of them will be coal-fired thermal plants

CHENNAI: The State Government has given permission for the establishment of five more power projects, with a total capacity of 10,140 megawatts (MWs), under the scheme of merchant power plants. The proposed power plants will be coal-fired thermal plants. Marakkanam is identified as the site for two plants, while Cuddalore, Nagapattinam and Manapad (in Tuticorin district) will have one plant each. About a week ago, the authorities issued letters of facilitation to the promoters of the five projects, according to an official.

A Mumbai-based company is going to put up the plant in Cuddalore while four companies, two each from Chennai and Hyderabad, are setting up the plants at the other places. From the date of issue of the letters, the projects are to be commissioned in four years.

[In respect of merchant power plants, promoters compete for customers and absorb the full market risk. There is no arrangement for power purchase agreements before the establishment of the plants, as done in the case of the conventional independent power projects. The risk of a merchant power plant is carried on the balance sheet of the promoter concerned].

With the latest instalment of five projects, the Government has given the nod for a total of nine projects having an aggregate capacity of 16,140 MW. One 1,000-MW project proposed in Cuddalore is under consideration of the authorities.

As in the case of the earlier projects, the Government has intimated to the promoters of the present set of projects that the Tamil Nadu Electricity Board will be under no compulsion to buy power. Twenty five per cent of power produced by the plants will have to be sold to the Board if the State requires it. In such a case, the TNEB will float bids and opt for cheaper power.

Eventually, the transaction between the Board and the merchant power plant promoters will be subject to the Tamil Nadu Electricity Regulatory Commission’s approval. When the merchant power plant promoters offer the power, the Board will also have the right of first refusal.

Two-level scrutiny

Prior to the issuance of the letters of facilitation, the proposals from the promoters are scrutinised at two levels. They are perused initially by a sub-committee of experts and later by a high-powered panel with the Chief Secretary as the chairperson.

After the Board gives its green signal, the proposals are sent to the Government for the final action, explains the official.

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