Construction Under Way at Singareni Collieries' 600-Megawatt Power Plant at Adilabad, Andhra Pradesh

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Researched by Industrial Info Resources (Sugar Land, Texas)--Construction is under way at the 600-megawatt (MW) power project at Jaipur Mandal, in the Adilabad district of Andhra Pradesh. The project is being implemented by state-owned Singareni Collieries Company Limited (SCCL) (Khammam, Andhra Pradesh). The coal-fired power plant is being established at an estmated investment of $600 million. The company will source about 70% of the required funds from financial institutions, and the remaining 30% from internal accruals.

SCCL purchases power from the Northern Power Distribution Company of Andhra Pradesh Limited (Warangal, Andhra Pradesh) at high prices whenever it faces a shortfall. Once the plant is functional, the company will retain about 150 MW of power for its consumption, and the surplus will be offloaded through a power purchase agreement (PPA) to the state grid. The PPA will be signed as soon as the tender process to finalize the offload rates is completed

SCCL will place an order for power equipment from Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) in July this year, while bids for the balance of plant will be announced in October 2010. The complete power plant equipment for the project is valued at about $280 million, while the balance-of-plant equipment is worth about $247 million. Company sources say that, starting in October this year, the project will be completed in 40 months.

The company holds 1,750 acres of land, out of which 350 acres belong to the government. Water for the project will come from the Godavari River, with arrangements to draw about 1 trillion cubic meters of water that is already in place. Coal requirements for the venture have been pegged at 2.75 million tons and will be supplied from SCCL's captive mines at Srirampur in Adilabad. Coal for the second phase of the project, involving a capacity addition of 600 MW, will be supplied from the RK open-pit mine, which will be developed over a year before mining commences.

The venture was originally planned as a merchant plant. However, the state government was not in favor of the merchant model, considering the regional power shortage and complications in power purchase. The output from the plant now will be supplied to the state.

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