The Hindu Business Line : GSPC Pipavav signs Rs 2,000-cr loan agreement with REC

Snapshot
The estimated cost of the project is Rs 2,334 crore.
BHEL was selected as EPC contractor through international bidding route.
Clearance from the Union Ministry of Environment and Forest awaited.

Our Bureau

Gandhinagar, Jan. 25 Rural Electrification Corporation Ltd (REC) has signed a Rs 2,000-crore loan agreement with GSPC Pipavav Power Company Ltd (GPPC) for the proposed 700-MW gas-based power project at Pipavav in the coastal Saurashtra region of the State, to be commissioned in 2010.

The agreement was signed in the presence of the Minister of State for Energy and Petrochemicals, Mr Saurabh Patel, and Mr Rama Raman, Executive Director, REC, among others. With this, the entire loan required for the project has been tied up. The estimated cost of the project is Rs 2,334 crore, an official spokesman said.

Mr Patel said the Pipavav project was conceived by the Gujarat Electricity Board (GEB) way back in 1990, based on the Panna-Mukta-Tapti (PMT) gas committed by the Union Government. Since the gas allocation was not coming through, the project implementation remained uncertain. Considering the huge electricity demand-supply gap in the Saurashtra region, the State Government decided to revive the power project through GSPC and directed GSPC and Gujarat Power Corporation Ltd (GPCL) to establish it.

Accordingly, GSPC incorporated a special purpose vehicle (SPV), namely GSPC Pipavav Power Company Ltd, wherein GSPC and GPCL would invest in the initial equity and induct other equity partners later.

The Chief Minister, Mr Narendra Modi, had laid the foundation stone for the project in October 2007. The Letter of Intent (LoI) for the EPC contract was issued on December 27 to Bharat Heavy Electrical Ltd, which was selected through the international competitive bidding route. GSPC would arrange for the gas and Gujarat State Petronet Ltd would transport it for running the power project. The entire electricity generated by the project would be sold to Gujarat Urja Vikas Nigam Ltd to bridge the demand–supply gap.

Necessary clearances from Gujarat Pollution Control Board, Gujarat Maritime Board and Airport Authority of India have already been received while clearance from the Union Ministry of Environment and Forest is awaited.

Considering the size of the project, the company has also applied for a mega-power project status. The project will generate over 1,000 jobs during the construction period and direct employment for more than 200 persons. As this is an environment-friendly and clean project unlike the coal or lignite-based power projects, GPPC has also initiated the process to register it with the United Nations Framework Convention on Climate Change to get the benefit of carbon credit and more value for the stakeholders.

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