India's IDFC to Develop 1,600-Megawatt Supercritical Thermal Power Plant in Gujarat

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Researched by Industrial Info Resources (Sugar Land, Texas)--IDFC Projects Limited (New Delhi), a wholly owned subsidiary of Infrastructure Development Finance Company (BSE:532659) (Chennai, Tamil Nadu), signed a memorandum of understanding with Bharat Heavy Electricals Limited (BSE:500103) (BHEL) (New Delhi) and Gujarat State Electricity Corporation Limited (GSECL) (Vadodara, Gujarat) to build a 1,600-megawatt (MW) coal-fired power plant based using supercritical technology near Sarkhadi in the Junagadh district of Gujarat.

The memorandum was signed at the fourth Vibrant Gujarat Global Investors' Summit held in January 2009. IDFC Projects also signed another memorandum of understanding to build a 10-MW solar power plant in the state. The summit is held every two years to develop business and commerce in the state. This year, the two-day event witnessed participation from 45 countries and facilitated the signing of 8,662 memorandums of understanding worth $243 billion.

The 1,600-MW supercritical coal-powered plant will be the first of the two phases of the proposed 3,200-MW power project, which will be developed on a build-operate-transfer basis. Each phase will consist of two 800-MW power stations. Power plants based on supercritical technology operate at much higher pressures and temperatures than subcritical power plants. This significantly reduces carbon-dioxide emissions, reduces the cost of electricity generation and helps achieve higher fuel efficiency. The supercritical technology, which provides higher power output and easy integration with carbon capture and storage units, is becoming popular among commercial power facilities.

BHEL and GSECL will each have a stake of 26% in the proposed joint venture, which will undertake the development and execution of the power plant. IDFC Projects, which will hold a stake of 48% in the venture, will also have management control and rights. Land acquisition and other regulatory matters will be handled by GSECL, while BHEL will design and deliver the generators, turbines and boilers for the power plant. Development Consultants Private Limited (Kolkata, West Bengal) will carry out the environmental study and project analysis. A power purchase agreement has also been signed between the joint venture and Gujarat Urja Vikas Nigam Limited (GUVNL) (Vadodara). The first phase of the power plant, estimated to cost between $1.61 billion and $1.71 billion, will be commissioned by 2013-14.

IDFC Projects, in a 49:51 joint venture with GSECL, will also develop a 10-MW solar power project in the state. The power plant will be set up in two 5-MW phases. The project, estimated to cost about $18.13 million, is expected to generate approximately 10 million kilowatt-hours (kWh) of power annually. A power purchase agreement with GUVNL has also been signed.

IDFC recently announced that it would invest about $604.5 million by the end of the Eleventh Five-Year Plan period (2007-12) on projects in India's renewable power sector. The company plans to develop about 500 MW of renewable power-generating units, which will include 100 MW of solar power plants, 300 MW of wind power projects and 100 MW of gas-powered and biomass-powered units. The average cost of construction is expected to be approximately $1.2 million per megawatt.

IDFC was set up in 1997 on the recommendation of an expert group study report, which stressed the need for a separate entity to handle the financing of infrastructure projects in the country. As of March 31, 2007, the company had provided financial support to 332 projects with total investments of $4.44 billion. The energy sector is one of IDFC's key focus areas. In 2007-08, financing was approved for 120 projects worth $1.71 billion. These projects include a 370-MW gas-fired combined-cycle power project in Andhra Pradesh, a 1,110-MW combined cycle liquefied natural-gas-fired power plant in Gujarat and a 210-MW coal-fired power project in Karnataka.

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