Date:09/06/2005 URL: http://www.thehindubusinessline.com/2005/06/09/stories/2005060902211700.htm

Back NLC to go ahead with Jayamkondam project on its own

Our Bureau

Forming a joint venture company for the project would have required various clearances and involved issues like corporate guarantees.

Chennai , June 8

NEYVELI Lignite Corporation Ltd (NLC) will go ahead with the Jayamkondam lignite mine-cum-power project in Tamil Nadu on its own, rather than jointly with the Tamil Nadu Electricity Board (TNEB) as was proposed earlier.

The first phase of the Jayamkondam project envisages a mine of about 9 million tonnes (mt) a year and a 1,000-MW power project at an initial investment of about Rs 6,000 crore. The power plant will be expanded to 2,000 MW in the second phase.

Presenting the 2005-06 Budget, the Tamil Nadu Finance Minister, Mr C. Ponnaiyan, had said that the State Government and NLC would jointly execute the Jayamkondam project.

Mr S. Jayaraman, Chairman and Managing Director, NLC, said at a press conference here on Wednesday that the company discussed the issue with the State Government and suggested to it that NLC could take it up on its own. "We will be able to do it faster and they have agreed," he said.

Forming a separate joint venture company for the project would have required various clearances and involved issues like corporate guarantees. If NLC did it on its own, it would not have any problem in raising funds or executing the project, Mr Jayaraman said and pointed out that the Jayamkondam project was initially proposed by NLC and was handed over to the private sector in the early 1990s. NLC will prepare a feasibility report for this project and hopes to get all the clearances in a year. Power from this project will be sold to all the Southern States, with Tamil Nadu getting almost 75 per cent of the power generated.

He said that NLC would sign an agreement with the TNEB on Thursday for setting up a joint venture company to put up a 1,000-MW coal-based power project in Tuticorin. A Memorandum of Understanding for this project was signed by the two companies about two years ago and after detailed discussions, issues relating to the joint venture had been sorted.

NLC will hold 89 per cent of the equity and TNEB the rest.

The cost is likely to be Rs 4,000 crore and NLC has the option of using either domestic coal from Mahanadi Coalfields Ltd, with which it is setting up a power project in Orissa, or imported coal or a mix of domestic and imported coal.

Asked about the proposed refinery residue-based power project at Chennai Petroleum Corporation in Manali, north of Chennai, Mr Jayaraman said it had been kept in abeyance.

One, technology for this project was closely held.

Also, there had been a sharp increase in petroleum product prices, forcing a re-look at the pricing of refinery residue.