The Hindu Business Line : TNEB, Neyveli to execute Jayamkondam lignite power project

THE Tamil Nadu Electricity Board and Neyveli Lignite Corporation will jointly execute the Jayamkondam lignite power project, announced the Tamil Nadu Finance Minister, Mr C. Ponnaiyan, while presenting the 2005-06 Budget in the Assembly on Wednesday.

The project, which has been talked about for more than a decade, is being revived and will be taken up at a cost of Rs 5,000 crore for a 1,000-MW power plant.

In the early 1990s, the thenJayalalithaa Government had signed an agreement with a consortium led by Williamson Magor & Co of the B.M. Khaitan group for an integrated mining-cum-power project at Jayamkondam.

The proposal was to mine 1.5 million tonnes of lignite and set up a 1,500-MW power plant, in phases. However, this was cancelled in the second half of the 1990s by the DMK Government, which awarded the project to a consortium led by Reliance, after an elaborate bidding process. But it has not made much progress, as the promoters want an effective payment security mechanism before they proceedwith the project.

Some time ago, Neyveli Lignite Corporation, a Government of India undertaking, proposed to the State Government that it take over and execute the Jayamkondam project.

This will be the third project that the Tamil Nadu Electricity Board (TNEB) will take up as a joint venture. It has signed agreements with the National Thermal Power Corporation for a 1,000 MW-project at Ennore, near Chennai, and with the Neyveli Lignite Corporation (NLC) for a 1,000-MW coal-based project at Tuticorin, in south Tamil Nadu.

Officials said the electricity board would not have problems finding money for the Jayamkondam project, which will be a pithead project because of which the power cost will be low.

The equity component of the Rs 5,000-crore project will work out to Rs 1,500. And even if it were to be shared on a 50:50 basis with the NLC, the TNEB would have to fork out Rs 750 crore as its share, over five to seven years. This, the officials say, will not be a problem for the electricity board.

In his speech, Mr Ponnaiyan said the Government had taken steps to plan for capacity addition and for the plans to add 4,000 MW of generating capacity. This includes two 1,000-MW projects to be executed by the TNEB jointly with the National Thermal Power Corporation and the NLC.

He said the electricity board would step up its capital outlay to Rs 1,495.30 crore for 2005-06 from Rs 1,255.53 crore in 2004-05.

Computerisation of billing and collection procedure for low tension consumers will be completed at a cost of Rs 120 crore in Chennai and at all municipal corporations and municipalities by the end of March 2006.

Mr Ponnaiyan said the entry tax on low sulphur heavy stock used by private power projects would continue to be levied at 3 per cent.

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