Projects Info | 28 April - 4 May, 2008

Industry

MUNDRA POWER PROJECT

Power Zone

India is grappling with the power crisis ever since the economy has started registering higher GDP growth rates. There is buoyancy in the economy for the last four year and all the sectors are either in top gear or in process. The development is multidimensional and is leading to pressure on the supply side of the infrastructure inputs such as power, coal, steel, cement and capital goods. Power being the driver of the growth engine is very much in demand and has already gone into scarcity mode. The Government of India has recognized the fact that economies of scale leading to cheaper power can be achieved through development of ultra mega power projects which use Super Critical Technology in place of sub critical technology. This technology provides advantages of low consumption of coal and results into lower emission rates. Ministry of Power, Central Electricity Authority (CEA) and Power Finance Corporation (PFC) are working together for development of 9 Ultra Mega Power Projects (UMPPs) during the XIth plan, each of these project will have a capacity of 4000 MW and will be awarded through tariff-based competitive bidding. These UMPPs will add about 36,000 MW out of XIth plan target of 78,577 MW within a span of 6-8 years and help in achievement of the targets for faster capacity addition. Establishing of coal linkages is critical to the success of such UMPP's. Most of these projects are based on imported coal. So far, three out of nine UMMP’s have been awarded.

The fund requirement for the proposed nine projects is estimated to be around Rs.1,60,000 crore. Ministry of Power has been playing an important role as a facilitator to coordinate with Ministries concerned and State Governments for ensuring coal linkages, environment and forest clearances, financial closure, execution of PPAs and proper payment security mechanism with State Govt / State Utilities and monitoring the progress of projects with regard to pre-determined timelines. The 4000 MW Mundra Ultra Mega Power Project (UMPP) is the first of the UMPPs which heralds the entry of super critical boiler technology in India for the first time which is significantly environment friendly than the conventional ones using sub-critical boiler technology.

Mundra Ultra Mega Power Project (UMPP) The Project located in Gujarat is the first project under the UMPP initiative to be transferred to the bidder in April 2007. Tata Power Company Ltd. emerged as the successful bidder through tariff based competitive bidding process by submitting the lowest tariff bid of Rs. 2.26 per unit (levelized tariff for 25 years with first year tariff at the rate of Rs. 1.91 per unit).

The project site covering approximately 1000 hectares is located south of Tunda Wand village in Mundra Taluka, Kutch district of Gujarat. The project consists of 5 units, each of 800 MW which will generate saleable power of 3800 MW to be supplied to five states namely Gujarat, Maharashtra, Rajasthan, Haryana and Punjab. The super-critical technology and the choice of unit sizes will help the project achieve higher efficiency thus saving fuel and reducing greenhouse gas emissions vis-à-vis conventional technology prevailing in the country. The first of the five units is expected to be commissioned in September 2011. The entire plant is expected to be commissioned by end of 2012.

Speaking on the occasion of signing financial agreements recently, Prasad R. Menon, Managing Director,Tata Power said "The signing of the financing agreements for Mundra UMPP is an important milestone. The good response demonstrates the faith of the lenders in our execution capabilities and expertise to complete the project in time. The terms of debt financing provides us long tenure of loans supporting our competitive bid price assumptions." The project beneficiaries in terms of allocation of power from the proposed project would be Gujarat (1900 MW), Maharashtra (800 MW), Punjab (500 MW), Haryana (400 MW) and Rajasthan (400 MW). These states are already facing the power deficit situation ranging from 2.4 per cent to 18.3 per cent supply side deficiency. (See the following table) To tie with the fuel supply for the project, Tata Power has recently acquired 30 per cent stake in Coal Companies of Indonesia.

Project Facts

Stakeholders
Coastal Gujarat Power Limited (CGPL)
Coastal Gujarat Power Limited is a Special Purpose Vehicle (SPV) formed for Mundra UMPP. Coastal Gujarat Power Limited has signed a Power Purchase Agreement (PPA) with seven procurers (distribution licensees) from five states i.e., Gujarat, Maharashtra, Haryana, Rajasthan and Punjab for the sale of contracted capacity and supply of 3800 MW electricity to these licensees.

Capacity
4000 MW

Cost
The project cost is estimated at USD 4.2 bilion (Rs
17,000 Crore.

Funding
A Consortium of Banks including leading multilateral agencies and Exim Banks are participating in the financing of this project. The financing comprises of equity of Rs 4250 crores, External Commercial Borrowings (ECB) of upto USD 1.8 billion and Rupee Loans of upto Rs 5550 crores. The ECB's include The Export-Import Bank of Korea, International Finance Corporation, Korea Export Insurance Corporation, Asian Development Bank, BNP Paribas and Rupee lenders include SBI (Lead bank for rupee lenders), India Infrastructure Finance Co. Ltd., Housing and Urban Development Corporation Ltd., Oriental Bank of Commerce, Vijaya Bank, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Travancore and State Bank of Indore. SBI Caps are the Financial Advisors and Mandated Lead Arranger for Rupee loans.

Beneficiary States
Gujarat, Maharashtra, Rajasthan, Haryana and Punjab

Current Status
The Site preparatory works are in progress and orders for all major equipments have been placed. The Company has signed the contract for complete Boiler Island scope on EPC basis with Doosan Heavy Industries & Construction Co. Ltd., Korea and contract for supply of Steam Turbine Generators with Toshiba Corporation. The project has been comprehensively covered by a seamless insurance cover by Oriental Insurance Co Limited.

Tech Talk!

Super Critical Boiler Technology
As per World Bank, electricity generated from coal currently accounts for about 40 per cent worldwide. Coal is an abundant fuel resource in many of the worlds‘ developing regions and forecasts show that it is likely to remain a dominant fuel for electricity generation in many countries for years to come. Supercritical coal fired power plants with efficiencies of 45 per cent have much lower emissions than subcritical plants for a given power output. Worldwide, more than 400 supercritical plants are in operation.

"Supercritical" is a thermodynamic expression describing the state of a substance where there is no clear distinction between the liquid and the gaseous phase (i.e. they are a homogenous fluid). Water reaches this state at a pressure above 22,1 megapascals (MPa). The "efficiency" of the thermodynamic process of a coal fired power describes how much of the energy that is fed into the cycle is converted into electrical energy. The greater the output of electrical energy for a given amount of energy input, the higher the efficiency. If the energy input to the cycle is kept constant, the output can be increased by selecting elevated pressures and temperatures for the water-steam cycle. Up to an operating pressure of around 19 MPa in the evaporator part of the boiler, the cycle is subcritical.

Period, Energy Requirement (MU), Energy Availability (MU), Energy Deficit / Surplus (MU), Energy Deficit / Surplus (%)
April 2007 - March 2008

All India 737052 664660 -72392 -9.8
Statewise
Gujarat 68715 57581 -11134 -16.2
Maharashtra 114934 93895 -21039 -18.3
Haryana 29149 25512 -3637 -12.5
Punjab 42120 38541 -3579 -8.5
Rajasthan 36196 35344 -852 -2.4

*MU: Million units
Source: Central Electricity Authority, April 2008 Report

UMPP PROJECTS

UMPP Location Current Status
Sasan in Madhya Pradesh Awarded to Reliance Power
Mundra in Gujarat Awarded to Tata Power
Krishnapatnam in A.P. Awarded to Reliance Power
Tilaiya in Jharkhand Bid evaluation in progress
Cheyyur in Tamil Nadu Identified
Akaltra in Chhattisgarh Identified
Sundergarh District in Orissa Identified
Tadri in Karnataka Identified
Girye in Maharashtra Identified


*Credits: Sandeep Ravidutt Sharma, Foundation of Infrastructure Research Studies Training (FIRST)


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