The Hindu Business Line : 3 Malaysian cos join race for 49% stake in Nagarjuna Power project

A clutch of foreign and Indian companies have pitched for the 49-per cent strategic equity stake in the 1,015-MW Mangalore power project promoted by the Nagarjuna group.

Those in the race for the stake include three Malaysian companies with infrastructure interests - Ranhill Berhad, Genting Bhd and Tenaga Nasional, sources said. Also in the race are Suez Energy and two unnamed Indian companies.

Officials of Nagarjuna Power Corporation Ltd (NPCL) when contacted said discussions were still under way with the intending participants, though they declined to reveal any names.

One of the private companies that have shown interest in the project is believed to be Tata Power. Tata Power when contacted said, at one stage, there was an approach from NPCL. Right now there is no discussion, the Tata Power spokesperson said.

Suez Energy and Genting Bhd are already familiar with India. Suez Energy's associate company Tractebel Energy was a joint venture partner in the Jindal Thermal Power Corporation's 260-MW project in Tornagallu and had exited two years ago. Genting Power is a 30-per cent stakeholder in the 368-MW IPP, Lanco Kondapalli, in Andhra Pradesh.

NPCL's parent company, Nagarjuna group and its associate companies would hold at least 51 per cent of the equity in the power project, comprising 30 per cent of the project cost. The sources said the costs have now been frozen at Rs 4,299 crore - at least Rs 200 crore lower than the originally estimated Rs 4,500 crore. The project is ready for financial closure next month.

The sources said the race for the 49-per cent stake started after NPCL completed all the major milestones for project implementation. The last milestone to be completed was a final clearance from the State Government for a revision in the terms of the power purchase agreement. Under these terms, the rate of return has been fixed at 14 per cent on the basis of 80 per cent plant load factor (PLF), against the originally agreed term of 16 per cent at 68.5 per cent PLF.

NPCL has already approved BHEL as the EPC (engineering, procurement and construction) contractor for the project. The EPC component is expected to cost at least Rs 2,500 crore and the civil works another Rs 980 crore. Power Finance Corporation is the lead arranger for the project debt funds estimated at 70 per cent of the cost or Rs 3,010 crore. The interest for the project debt has been fixed at 7.25 per cent for 12 years.

The sources said NPCL had also frozen its fuel supply tariffs at $50 per tonne for a five-year period, against the current international steam coal prices of around $71 per tonne. The project is entirely to be fired on imported coal. The coal suppliers who have agreed to the company's terms include Glencore International from South Africa, Rio Tinto from Australia and P T Adaro of Indonesia.

The fuel requirement at 80 per cent PLF is estimated at 3 million tonnes per annum of coal with a calorific value of 6,100 kilo calories per kg.

When work on the project commences, it would be first inter-State power project to be kicked off in the private sector, after a 10-year wait and a protracted legal battle.

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