The Hindu : Business : NTPC, CIL to float SPV

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Tuesday, Jan 15, 2008
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NTPC, CIL to float SPV

Special Correspondent

To build two power plants at a cost of Rs. 7,500 crore

Both companies will have equal parnership
Government aims at power for all by 2012

NEW DELHI: National Thermal Power Corporation (NTPC) and Coal India Limited (CIL) are all set to ink a memorandum of understanding to float a joint venture special purpose vehicle (SPV) to build two power plants of 1,500 MW at a cost of Rs. 7,500 crore and develop two coal mines in Jharkhand with an investment of Rs. 500 crore.

Official sources said NTPC and CIL were in the process of finalising the MoU documents and a final scrutiny of the same was going on.

The joint venture between the two public sector undertakings had been doing rounds for the last few months and this move is seen as a strategic step to put in place a mechanism of developing mutually beneficial projects. The memorandum of understanding (MoU) will include the clause to float a SPV to build two integrated power plants at a cost of Rs. 7,500 and develop two coal mines in Jharkhand at an estimated cost of Rs. 500 crore.

The sources said the equity stake of both companies would be on a 50:50 basis and the power produced from these plants would be commercially sold, mostly through power purchase agreements (PPAs).

NTPC and CIL have been allocated two coal mines — Brahmini and Chichro Patrimal — which together had a thermal coal reserves to the tune of 2,000 million tonnes and the reserves were expected to last for at least 30 years. NTPC has set a target to become a 50,000 MW company by adding over 22,000 MW during the XI Plan (2007-12), while executing its diversification plans.

The Government has set the objective of ensuring power to all by 2012 and accordingly it has set a capacity addition target of 78,577 MW during the 11th Plan period.

During the 12th Plan, the capacity addition target is expected to be about 82,200 MW.

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