India's L&T Power Emerges as Lowest Bidder for 1,320-Megawatt Rajpura Power Plant

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Researched by Industrial Info Resources (Sugar Land, Texas)--L&T Power Development Company Limited (Mumbai), a fully owned subsidiary of Larsen & Toubro Limited (BSE:500510) (L&T) (Mumbai), is likely to develop the $1.29 billion, 1,320-megawatt (MW) Rajpura supercritical thermal power plant in Punjab. Sources indicate that the company has secured the contract by submitting the lowest bid of $0.061 per kilowatt-hour (kWh).

Other bidders for the Rajpura coal-fired power project included JSW Urja Limited (Mumbai), Adani Power Limited (BSE:533096) (Ahmedabad, Gujarat), GMR Urja Limited (Bangalore, Karnataka), Lanco Infratech Power Projects Limited (BSE:532778) (Hyderabad, Andhra Pradesh) and Welspun Urja Limited (Mumbai). Welspun Urja Limited was the second-lowest bidder, with a levelized tariff bid of $0.064 kWh. The Punjab State Electricity Board (PSEB) (Patiala, Punjab) invited bids in a tariff-based competitive bidding process for the Rajpura power project, which is to be developed on a build-own-operate model. Project officials have indicated that L&T Power will shortly receive a formal letter of intent after necessary clearances have been obtained from PSEB.

Project officials have indicated that of the seven companies selected, six companies qualified for the bidding process. Early last year, PSEB's attempt to begin the project failed when it received only one financial bid. Although there were eight interested bidders--including Tata Power Company Limited (BSE:500400) (Mumbai), Lanco Infratech, Reliance Power Limited (BSE:532939) (Mumbai), and Essar Power Limited (Mumbai)--only Lanco Infratech submitted a quotation of 0.071 rupees per kWh. PSEB decided to defer the bidding process, stating that energy firms were backing out due to the impact of the economic slowdown. Early this year, the Punjab State Electricity Regulatory Commission (PSERC) (Chandigarh, Punjab) decided to re-invite tenders for this project. Officials have observed that the bid submitted by L&T Power is lower than the earlier one submitted by Lanco Infratech. The lower bid is expected to help PSEB save about $97.3 million per year.

The Rajpura power plant has faced many hurdles in the past. There were stiff protests from farmers regarding land acquisition. This led to PSEB's decision to relocate the power project. The project will now be built in Nalash Village, which is 6 kilometers from Rajpura. A total of 1,078 acres of land have been allocated, and the project has received the necessary statutory and environmental clearances. Water supply will be sourced from Bhakra canal, situated about 6 kilometers from the site. The project will consist of two super-critical, power-producing units of 660 MW each. The first unit is expected to be commissioned by September 2013, followed by the second unit in January 2014.

Industry experts indicate that Punjab's power scenario will be back on track with the development of the Rajpura and Talwandi Sabo power plants. PSEB awarded the 1,980-MW Talwandi Sabo power plant project, located 65 kilometers from Bhatinda, to Sterlite Energy Limited (SEL) (Mumbai), a fully owned subsidiary of Vedanta Resources (LSE:VED) (London, England). By 2012, PSEB is expected to commission the 500-MW Lehra Mohabat II and the 540-MW Goindwal Sahib power plants. By end of the 11th Five-Year Plan (2007-12), Punjab's power generating capacity is expected to reach 7,451 MW. During 2011-12, energy analysts forecast that the state's peak power demand will be about 11,000 MW. The commissioning of the Talwandi Sabo and Rajpura super critical projects will play an important role in providing energy security to the state. PSEB is also developing the 2,640-MW Gidderbaha power project. The project bidding process has been delayed due to lack of availability of coal linkages. The power plant, which is expected to be built on 2,311 acres of land, is estimated to cost about $1.29 billion.

India is developing several power projects based on supercritical power plant technology. Several Indian power equipment companies, including L&T and BHEL, have developed technical expertise in this area. Recently, India's Central Energy Authority (CEA) (New Delhi) announced that the federal government was working on a proposal to develop 10 ultra-supercritical power projects, with 800 MW capacities each. The bidding process is expected to begin after the completion of the tendering process for 11 super critical power projects, with capacities of 800 MW each.

Globally, supercritical power plants are being chosen by project developers for the range of benefits they offer. These power-generating facilities are designed to operate at temperatures and pressures that are higher than traditional power plants. Super-critical power plants can attain thermal efficiency of more than 45%, in comparison to the 30% to 38% achieved by previous generation conventional plants. They are more fuel-efficient and emit lower greenhouse gases by operating at a pressure range of 3,500 to 4,000 pounds per square inch.

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