Tamil Nadu scraps power joint venture, BHEL surprised

Taking the state-owned Bharat Heavy Electricals Ltd. (BHEL) by surprise, Tamil Nadu Chief Minister J. Jayalalithaa Friday scrapped the 1,600 MW power joint venture with it and announced that the government would fully fund the project itself.

In a statement issued here Friday, Jayalalithaa said there had been no progress in the Rs.8,000 crore power project after the Memorandum of Understanding (MoU) was signed in 2007 between the Tamil Nadu Electricity Board (TNEB) and BHEL.

The TNEB had signed the MoU with BHEL to promote the power project at Udangudi in Tuticorin district, taking a 26 percent stake each in the Udangudi Power Corporation Limited, which was promoted in 2008.

Jayalalithaa said the balance 48 percent stake would be contributed by a private player who decides to participate in the project or by a financial institution funding the project.

She said as there was no long-term coal linkage from any of the domestic coal companies, the TNEB would import the required coal and action would be taken to get environmental clearance for the project.

Blaming the earlier DMK government for the project not going forward and also BHEL for its non-cooperation, Jayalalithaa said except for the contribution of Rs.32.5 crore each by the joint venture partners, there was no progress in the project.

She said the debt-equity ratio of the Rs.8,000 crore project has not been determined.

Jayalalithaa said Thursday that after reviewing the status of the project with officials, the government decided that it was not possible to implement the project through the Udangudi Power Corporation and, therefore, it would fund the project from its own coffers and the project would be executed by the TNEB as a state project.

However, it is not known whether the state government would rope in another private player for the project by offloading part of its stake.

Contacted for reaction, BHEL officials expressed their surprise at the Tamil Nadu government’s decision.

“Even at the last board meeting of Udangudi Power Corporation, such an option was not discussed,” a BHEL senior official, who did not want to be named, told IANS over phone from New Delhi.

“It is a sad development. But BHEL cannot be blamed for the delay in getting the coal linkage or the environmental clearance. The joint venture company has its own management team. It is for the company to take up the issues with the relevant government agencies,” he added.

The coal supply linkage and the environmental clearance are inter-linked. The project is considered for 12th Five Year Plan and no coal linkage has been given for any power project for that plan period, he said.

The official said BHEL is very much interested in the project as it has invested a sizeable amount in the project.

According to him, the option of using imported coal as well as its ratio is under discussion.

An official of the Udangudi Power Corporation told IANS that the feasibility of using imported coal to power the plant is being looked at.

He said land filling work has got over at the project site.