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C. Shivkumar

BANGALORE, Jan. 2

JINDAL Tractebel Power Company Ltd's (JTPCL) proposed expansion to 500 MW has landed in trouble, with the Central Electricity Authority (CEA) turning down the draft of the detailed project report (DPR).

Sources said here that the CEA's rejection had been made on the grounds that the DPR did not include a tentative financial package. Besides, the company had so far not completed the requirements for obtaining a techno-economic clearance (TEC) from CEA. These included some of the statutory clearances.

JTPCL is currently running a 260 MW plant at Tornagallu in Bellary district. Of the total capacity, 130 MW has been earmarked to the State grid. The expansion of this project has been proposed with equity participation from the State-owned utility, Karnataka Power Corporation Ltd. KPCL's equity stake in the project was expected to be at least 25 per cent, the sources said and the entire capacity from the expansion was expected to be earmarked exclusively for the State grid.

The sources also said that the DPR did not provide the details of the engineering procurement and construction (EPC) contractor, a prerequisite for techno-economic clearance. This was because the company had not finalised the EPC contractor. Moreover, the CEA said that the cost estimate made by the company for the expansion, was on the high side. JTPCL had quoted a project cost of Rs 2118.56 crore. The CEA said that given the current state of the power equipment market, there was scope for the cost to be reviewed.

The sources said that the company would now have to obtain all the statutory clearances and finalise the EPC contract for securing techno-economic clearance. After all conditions have been fulfilled, the company would have to resubmit the DPR to the CEA for techno-economic clearance.

The State Government had attempted to push the project on the grounds that it was necessary to meet the shortfall estimated at 3,500-4,000 MW by 2010. Accordingly the State's energy department had recommended clearance of the project way back in June last year. This is despite the fact that the 210 MW Raichur Thermal Power station (RTPS) Unit 7 has not yet secured financial closure. Nor has the State Government been able to assure bankable support to a series of private sector projects, essential for attaining financial closure. In all these projects the tariffs are as competitive as the JTPCL expansion unit.

The sources said the rejection of the DPR implied that the State Government would not be in a position to meet the demand shortfall during the period on the basis of the current levels of availability.

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