Public sector NLC India Ltd (formerly, Neyveli Lignite Corporation) is in talks with financiers for buying their stake in GMR Chhattisgarh Energy Ltd, a company of the GMR group, the Chairman and Managing Director of NLC, SK Acharya, told Business Line today.

GMR Chhattisgarh Energy runs a 1,370-MW thermal power plant at Raikheda in the Raipur district of Madhya Pradesh. Last year, the GMR group converted ₹2,990 crore of the company’s debt into equity, resulting in the lenders owning 52 per cent of the company’s equity.

Acharya said that NLC is interested in buying the stake from the lender-stakeholders. The entity that would most probably do the purchase would be NTP Ltd, a joint venture of NLC and Tamil Nadu State’s electricity generation and distribution utility, Tangedco, in which NLC owns 89 per cent stake. According to information provided by the Central Electricity Authority, the project suffers from “no coal linkage, no power purchase agreement and no power evacuation corridor.”

It is learnt that the Chhattisgarh project was one of those coal-based power plants that got stranded because the coal suppliers (owned by the Government of India) refused to sign long-term fuel supply agreements until the project had a long-term power purchase agreement.

The power purchase agreement could not be signed until the fuel supply agreement is in place.

NLC may get around the problem by getting Tangedco sign the long-term PPA, Tangedco being a joint venture partner.

The project was originally estimated to cost ₹8,290 crore (₹6.05 crore per MW), but the latest estimate is ₹11,016 crore (₹8.04 crore per MW) – a cost overrun of ₹2,726 crore.

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