IndianOil to diversify into wind power generation
Mumbai   31-Jul-2008
IndianOil will diversify into wind power generation on the lines of Oil & Natural Gas Corporation (ONGC) and Bharat Petroleum Corporation (BPCL).The proposed project would cost Rs 131.66crore. The full captive mode wind power project is expected to give an internal rate of returns (IRR) of 11.85% on stand alone basis, taking into consideration the accelerated depreciation, income tax benefit under section 80IA and clean development mechanism (CDM) benefits. IndianOil sources told FE, " IndianOil 's vision, of being a major diversified, integrated energy company with a strong environment conscience and in view of the over dependence on imported crude, makes it imperative for IndianOil to explore/diversify into alternative energy sources such as wind power, which can be used for own consumption and marketed as well. IndianOil had identified Gujarat, Rajasthan and Orissa for exploring the possibility of implementation of a pilot wine power project to start with. Finally, IndianOil zeroed in on Gujarat Suzion has won the bid for the development of 21 mw project." The Energy and Resources Institute (TERI), which prepared a feasibility report for the proposed wind power project, completed the technical evaluation of the bids recommending disqualification of Vesta; RRB bid for in adequacy and acceptance of Suzion techno-commercial bid with the agreed modification to the tender. As per tender modifications, to safe guard the interest of IndianOil, Suzion agreed to furnish the bank guarantees (BGs) against milestone payments. Bank charges for such BGs will be on IndianOil 's account subject to a maximum of Rs 15 lakh. The land will be leased to IndianOil till the land use is converted to non-agricultural and it is transferred to IndianOil. Lease rent for one-year only will be paid by IndianOil. Wind power projects are eligible for benefits under the CDM projects. The improvement in IRR as a result of additional revenue from CDM is about 1.9% point. The annual benefit will be about Rs 2.28 crore (assuming certified emission reduction (CER) selling rate of 14 euro per CER and conversion rate of 1 euro = Rs 66). The notional revenue for captive consumption has been computed andbased on a fixed rate of Rs 5.48 per kWh for the full project life as per present averaged billed charges, it is expected that the rate would increase periodically over die project life, thereby improving the project revenues and project viability.