Panel to consider firm’s offer to sell Rajpura thermal power plant for Rs 9,690 cr

Tribune News Service

Chandigarh, September 13

The Punjab Government is forming a committee to evaluate the offer made by Larsen & Toubro (L&T) to sell the Rajpura-based 1,400-megawatt thermal power plant project.

The company has proposed to sell the plant at a cost of around Rs 10,000 crore to the state government.

A committee comprising officials of the Punjab State Power Corporation Limited (PSPCL), state government and external technical experts is being formed to evaluate the cost. The promoters of Nabha Thermal Plant, Rajpura, had offered to sell the plant to the state government last week for Rs 9,690 crore or Rs 6.92 crore per MW. The company, in its proposal, said other than its equity of Rs 2,688 crore, they also had an outstanding debt of Rs 7,002 crore.

In the recent times, the thermal plants have been allotted for cost varying between Rs 3.19 crore to Rs 4.32 crore per MW.

“The per MW cost of the Rajpura plant ought to be much lower than the quoted price, as it has higher capacity units (two units of 700 MW each). It has been in operation for six years and the substantial capital cost of the plant has been recovered.

“Moreover, if it were acquired at the value demanded by its promoters, at 9 per cent annual interest in loan, the estimated additional burden on the PSPCL would be anything between Rs 7,000-Rs 7,500 crore vis-à-vis fixed cost to be paid by the PSPCL as per the Power Purchase Agreement with the promoters of the company when the plant was originally commissioned,” says Jasvir Singh Dhiman, president of the PSEB Engineers’ Association. He adds as reliance on solar power increases in the coming days, the power plant’s present plant load factor (PLF) will come down from 85 per cent.

Though officials in the government say the price at which the plant is being offered is too high and requires to be negotiated, they feel buying the plant will prove to be beneficial for the state. “For one, Punjab will not have to pay the huge fixed cost to the power plant that it pays now, which will help reduce power tariff. Since it is relatively new, it has super critical technology; is more energy efficient; has opportunity to install another unit of 700 MW; and has benefits for Punjab beyond the 25-year period of contract,” says a senior official. He adds they are looking at linking the state’s own coal mine at Pachchwara to this plant.