Indiabulls Power, Punjab State Power to Build 1,350-Megawatt Thermal Power Plant at Mansa

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Punjab State Power Corporation Limited (Powercom) (Patiala, Punjab) has announced the signing of a memorandum of understanding with Indiabulls Power Limited (BSE:533122) (Mumbai) to develop a 1,350-megawatt (MW) thermal power plant near Mansa.

Powercom was created in April this year after the Punjab State Electricity Board (PSEB) split into two divisions: Powercom and the Punjab State Transmission Corporation Limited (Transcom). Powercom proposed the power plant following the new power generation policy announced by the Punjab government in June this year.

Indiabulls has announced the formation of a special purpose vehicle company, Peona Power Development Limited, as a 100% subsidiary of Indiabulls to develop the power plant in a two-stage approach.

The first phase of the power plant will consist of two units, each of 270 MW generating capacity, to give an initial capacity of 540 MW. The second phase will consist of three further 270-MW units, totaling 810 MW.

Under the state government's Power Generation Policy 2010, the Punjab government offers various incentives and assistance to developers of new power projects in the state, including pithead/coastal thermal power plants, with an installed capacity of 250 MW or greater.

The incentives include total exemption from fees and stamp duty to register land acquired for a power project, including change of use charges. All supplies required for the setting up and trial operation of the projects, including capital costs, construction and raw materials costs would be totally exempt from entry tax. Electricity used during the construction period will have 50% of its duty waived.

As part of the Power Generation Policy, the state government, through its nominated agency, will have first rights to 70% of the power produced by the plant. The power purchase agreement, which must be signed within 18 months of the signing of the memorandum of understanding, will have an initial term of 25 years, but can be extended under mutually agreed terms and conditions between the government and developer.

The Power Generation Policy is designed to find solutions to the acute power shortages facing the state of Punjab. Peak demand for electricity in the state averages about 7,700 MW, while generating capacity lags behind at 6,842 MW, causing general power restrictions for domestic consumers and special restrictions on electricity usage for industrial consumers, particularly those with high electricity demand, such as arc or induction furnaces and steel rolling mills.

By offering incentives to power developers, the state government hopes to accelerate the addition of generating capacity. As stated in the Power Generation Policy: "Electricity is a critical infrastructure on which the socio-economic development of the state depends. Reliable, quality and affordable power supply is one of the key drivers for the state's industrial and commercial growth."

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