Mahagenco scraps bids for $843 mln power project: sources

By Ketan Bondre

MUMBAI (Reuters) - Maharashtra State Power Generation Co Ltd, or Mahagenco, has scrapped the bidding for equipment to supply and build a 1,220 MW power plant after putting the 46 billion rupee project on the backburner due to unavailability of gas, three company sources told Reuters.

A shortage of available gas in India has stranded gas-based power projects which are nearing completion with a combined capacity of around 7,000 MW, exacerbating a power shortage in Asia's third-largest economy.

Power equipment makers including Bharat Heavy Electricals , Larsen & Toubro and BGR Energy had bid for the contract to design, supply and build the proposed expansion of the project in Uran in western India, the sources said.

Spokesmen at Mahagenco and Larsen & Toubro declined to comment, while officials from Bharat Heavy Electricals and BGR Energy were not immediately available for a comment.

Mahagenco sought bids for the equipment during the fiscal year that ended in March 2011 and cancelled the process after conducting technical qualifications for the bidders because the Indian government could not allocate 5.4 million British thermal units (mmBtu) of gas for the project, said one of the sources, adding that the deposit money was returned to the bidders.

All of the sources declined to be identified, citing the sensitivity of the matter.

India apportions natural gas produced in the country to fertiliser, power and industrial companies, but falling gas output at the offshore KG basin field operated by Reliance Industries has disrupted the plans of many would-be customers.

State-run Mahagenco first proposed the expansion of its plant at Uran in 2004. Its existing 672 MW plant at the site is running at 50-70 percent of its designed capacity because it can't get enough gas, one of the sources said.

(Reporting by Ketan Bondre; Editing by Tony Munroe)