Tatas, IndianOil join hands for 1,000-mw project in Orissa
New Delhi   29-Jul-2008
Tata Power Company and IndianOil have decided to float a new company for jointly developing a 1,000 mw coal-based mega power project at Paradip in Orissa. The board of IndianOil is meeting on July 30 to approve a joint venture agreement with TPC for setting up of this captive power project. The shareholding pattern of the JV would be 74.26 for TPC and IndianOil, respectively. <div align=center><img src=/NewImages/Thumbnail/orissaproject_400.jpg width=399 /></div> While the project is essentially being set up as a captive project to meet the power requirements of IndianOil’s 15 mtpa integrated refinery cum petrochemicals complex at Paradip, sources said the plant may also supply power to the proposed steel plant of the Tata group in Orissa as also other industries in and around the Paradip complex. Under the JV agreement, IndianOil is committed to source at least 51% power and the surplus generation can be traded by the joint venture company. The authorised share capital of JVC would be Rs 1,200 crore, and the capital would be increased to meet the requirement of further investment as and when called for. To start with, the initial paid up capital of the JVC would be Rs 600 crore consisting of 60 crore equity share at face value of Rs 10 each. Based on a feasibility study carried out by TPC and IndianOil , the tariff for power supply to the Paradip complex has been estimated on annual levelised basis for 25 years operation, at Rs.2.46/unit. The levelised power tariff, on similar basis, for captive generation within Paradip complex has also been assessed jointly with M/s. Foster Wheeler, which indicates a significantly higher value of over Rs.5/unit. Therefore, the power tariff for coal based power plant for supply to Paradip complex has been found to be much economical vis-a-vis setting up captive facilities within Paradip complex. It has also been agreed between TPC and IndianOil that the chairman of the new JV company would be the nominee of TPC. So long as TPC holds equity share in the JVC atleast to 51%, it will have the right to appoint/nominate CEO of the company. The CFO of the company would be the nominee of IndianOil and would be selected by the Board based on the prospective names to be provided by IndianOil. IndianOil’s 15 mmtpa refinery cum petrochemicals complex at Paradip in is envisaged to be implemented under two phases. Phase-I of the project considers installation of refinery and associated petrochemicals based on FCC unit stream. The petrochemical products targeted under Phase-I include Para-xylene, Styrene and Polypropylene. Phase-II project envisages installation of a liquid/ mixed feed cracker and associated downstream polymer products, for which the conceptualization study is in progress. The requirement of power for Phase-I of the project is around 300 mw, which will be increased to the level of around 600 mmt with implementation of Phase-II project. Subsequently, the capacities of refinery and the cracker complex will be expanded, which interalia will require incremental power load. In addition, IndianOil is also studying the feasibility of implementation of coke gasification unit based on petroleum coke that would be available from Paradip complex and utilization of syngas generated thereof for further valuable downstream derivatives. As such, it is expected that the total power load for Paradip complex in future may be close to 1,000 mw.