The Hindu Business Line : Lanco pips Reliance Power, Jindal for two UP projects

Hyderabad, April 11 Lanco Infratech Ltd has won the mandate for two super critical power projects in a competitive bid for development of 3,300 MW in Uttar Pradesh.

Lanco outbid with a quote of Rs 2.88 per unit with Reliance Power (part of the ADAG) quoting Rs 2.94 per unit, followed by NTPC (Rs 3.44) and Jindal Steel & Power (Rs 3.591) for the Prayagraj project of 1,980 MW(3x660).

For the 1,320-MW Sangam (2x660mw), Lanco outbid with Rs 2.83 per unit followed by Reliance Power, CESE, JSPL and JSW, according to a press release.

As per the terms of the bids which were opened on Friday, 90 per cent of the power generated through the projects must be sold to the Uttar Pradesh Government and the remaining 10 per cent through the merchant market sales.

debt:equity ratio

The Chairman of Lanco, Mr L. Madhusudhan Rao, told Business Line this was a significant win for the company. The Rs 14,000-crore project will take about 48 months to complete and have conventional 80:20 debt:equity ratio model. These two projects would take the company’s total projects on hand to 13,000 MW, covering both those that are operational and those under implementation.

“These two projects may be considered as clean projects for development as most of the necessary clearances have already been secured by the Uttar Pradesh Government. Such projects would be much easier to execute compared to those where a company has to do all the ground work for clearances,” he said.

Coal supply

The coal for the two projects will be supplied by the Uttar Pradesh Government through linkages from the Northern Coal Fields and typically should take about 48 months from the Offer of Letter of Intent, which we expect to be awarded within a few weeks, he said.

Most of the projects being awarded through competitive bids are witness to aggressive pricing by both Lanco and Reliance Power. In fact, one of the ultra mega power project at Sasan, which was awarded to Lanco after it outbid Reliance Power, was later re-awarded to Reliance Power after prolonged wrangles.

Asked about close contest between the two groups, Mr Rao said “these are competitive bids which both of us participated in. Depending upon the price quote, we have been awarded this project.”

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