Neyveli Lignite to set-up 1980MW power plant in UP

The cabinet on Thursday approved Neyveli Lignite’s proposal for formation of a joint venture (JV) company with Uttar Pradesh Rajya Vidyut Utpadan Nigam (UPRVUNL) to set up a thermal power project in Uttar Pradesh.

AR Ansari, chairman and managing director, Neyveli Lignite told CNBC-TV18 that the company would be setting up supercritical coal-based thermal power unit of 3x660 megawatt (1,980MW) capacity at Ghatmapur in Kanpur.

"For this, we will be getting a linkage from the Coal India and in addition to this we will be looking at imported coal," he added.

The company will ink an MoU with UPRVUNL for setting up the plant with 50:50 equity participation.

The Cabinet also cleared a proposal to switch from the current mixed structure to ad valorem royalty on coal and lignite. On coal, the ad valorem royalty is fixed at 14%, while for lignite it has been fixed at 6%. Thsi move is expected to boost revenues in coal-bearing states.

"The changes announced on royalty front will not have any impact on us," he added.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: What kind of timelines are you looking at for this thermal power plant? How do you see things progressing on that front from here?

A: The approval has been given for Ghatmapur, we will be setting up supercritical thermal station there of 3*660 MW capacity. It will be coal-based power station. For this coal, we will be getting a linkage from the Coal India and in addition to this we will be looking at imported coal.

Q: The government also approved some changes in terms of royalty for coal and lignite, can you just explain to us what exactly the impact could be for a company like yours because of those changes in rates?

A: Whatever changes have been announced by the government does not affect a generating company because it becomes a pass through item for us. Definitely, whenever there is a change on royalty, it is passed on to the main consumer. So there won’t be any impact on us. As far as the coal based power stations are concerned, that will also be passed on to the consumer.

Q: What kind of timelines are we looking at for this thermal power plant, by when do you expect to tie-up the linkages and order equipment etc?

A: It has been approved just now and it is a joint venture (JV). The UP government and NLC is now going to sign JV agreement, which will be done in ten days time from now.  After that we shall be looking forward for other additional items. I have already prepared the pre-qualifications (PQ) for steam generators BTG. We will be floating a tender for 6 * 660 within six-eight months time.

The letter of intent (LOI) could be awarded within eight months time provided we get a zero debt approval. We are a JV and being a Navratna company, it is difficult for me to go ahead independently. We are going ahead for cabinet nod to get our expenditure for this JV approved.