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Saturday, Jun 08, 2002

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Industry & Economy - Power

DVC board meet to consider SBU proposal

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It was being felt that the organisational rejig was the need of the hour if DVC were to face the emerging challenges of the times.


THE board of Damodar Valley Corporation (DVC) will consider reorganisation of the operations of the corporation into strategic business units (SBUs) at its meeting next week.

DVC sources told Business Line the proposal that would be placed before the board entailed separating transmission from generation and segregating the nine power plants into separate profit centres.

The corporation's three activities - power generation, flood control and irrigation (water management) and soil conservation were already being operated as separate activities, sources said. As of now, power generation is DVC's only profit-making activity.

Sources said that it was being felt that the organisational rejig was the need of the hour if DVC were to face the emerging challenges of the times. The corporation is under pressure from its administrative body - the Union Power Ministry - to boost its capacity by nearly three times within the next five years. DVC has set up a capacity of only 2761.5 MW in the 50-odd years of its existence. The projected plan outlay of these projects is Rs 25,941 crore.

The cost of the new projects too has assumed importance. DVC has already begun work on the fourth unit of Mejia Thermal Power Station. However, experts felt that DVC should now move from the regime of negotiated contracts to setting up projects on more competitive basis.

Admitting that the cost of the 210 MW Mejia Unit No 4 at Rs 797.8 crore was on the higher side, sources said that this was despite many of the facilities such as land, water intake system, coal handling plant already existing (DVC already has three units in operation at Mejia). This issue becomes important in view of DVC's plan to start exporting power through Power Trading Corporation.

DVC plans to set up its future projects either through open tenders or as joint ventures, they said adding that this was another reason why restructuring of operations was necessary.

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