The Hindu Business Line : Bokaro Power board approves new 500 MW project — Mecon preparing detailed feasibility report

THE board of directors of Bokaro Power Supply Co Ltd (BPSCL), a 50:50 joint venture between SAIL and Damodar Valley Corporation (DVC), has cleared the proposal to set up a 500 MW power plant at Bokaro in Jharkhand.

According to a senior SAIL official, a detailed feasibility report for this project is almost ready. The report is being prepared by Mecon and financial details are currently being worked out.

The power plant would be a green-field project spread over 750 acres. It would have two units of 250 MW each; the total cost of the project is pegged at Rs 2,200 crore.

"Once the financials are ready, the matter would be forwarded to the SAIL board for final approval. Subsequently, we would start the tendering process," the SAIL sources told Business Line.

Meanwhile, SAIL has placed an order for a new boiler with Alstom to expand the capacity of the existing power plant in Bokaro owned by BPSCL.

The rated capacity of this unit was 302 MW, but effectively it dropped to 200 MW. With the installation of the new boiler, the capacity would increase to 275 MW. The cost of this capacity expansion is around Rs 250 crore.

The green-field power project is likely to be funded through debt and equity. Sources said that both SAIL and DVC may invest on a 50:50 basis towards equity; the rest would be raised as debt by the joint venture firm.

"We expect the final report to be forwarded to the SAIL board by March this year. The tender process is likely to start either by May or June," the sources added.

BPSCL was established in 2001 when SAIL decided to move out of "non-core business activities". The company acquired the operational rights of the then captive power plant of Bokaro Steel Plant.

SAIL has already agreed to purchase at least 200 MW from the proposed new power plant. This apart, it will continue to purchase power supplies of the existing capacities managed by BPSCL.

The proposed new power capacity is of great importance to Bokaro Steel Plant as it would increase its hot metal production capacity to 6.5 million tonnes a year from the current level of 4.5 million tonnes under the SAIL Corporate Plan 2011-12.

More than Rs 10,000 crore worth of investments are likely to be made in Bokaro Steel Plant, excluding the green-field power plant, during the next few years.

In 2004-05, the plant registered a turnover of Rs 10,019 crore and a net profit of Rs 3,290 crore.