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Hindujas set to sign fuel deal on power project

With the major bottlenecks and glitches cleared and longpending issues sorted out, the Hinduja National Power Company Limited is all set to sign the fuel supply agreement with Coal India Limited for the Hinduja's 1,040 mw thermal power project in Vishakapatnam by the end of November.

The company submitted an updated draft agreement to the government over the weekend taking into consideration all the agreements reached hitherto, company sources said in New Delhi on Monday.

The only problem area now is the guarantee issue. "The government has agreed to give us a comfort letter instead of the guarantee letter and we have now requested for a draft of the same," said sources. "If the draft is acceptable to us, we will straight away go ahead with signing the fuel supply agreement, otherwise it might take us about a month to settle the issue.

"The government officials will now be reviewing this draft and if everything goes as planned, the first unit would be commissioned within 38 months from the zero date and the second unit in six months thereafter,'' the sources added.

A total investment of Rs 43 billion has been envisaged for the project.

According to sources, the high-level meeting with the coal ministry officials had ironed out some of the most nagging glitches in the agreement, paving the way for a formal agreement by the month-end.

It may be recalled that key tenets of the coal supply and transportation agreement, had already been approved early this year but minor glitches remained. The coal ministry had then referred certain points in the coal supply and transportation agreement to a high-powered board which had taken certain decisions on the same. The company had, thereafter, requested the coal ministry officials to convene a meeting to deliberate on the decisions taken by the board.

"We had requested them to call a meeting where we could discuss these decisions and assess their acceptability to us,'' the sources added.

The meeting was attended by the top brass of Coal India, its subsidiary Mahanadi Coalfields Limited, and the ministries of power and coal.

The HNPCL had accepted the coal ministry's suggestion that compensation for short supplies be computed in terms of tonnes of coal and not the subsequent impact of the plant load factor of the power plant.

The company has also agreed to weed out terms that could compel the coal supplier to pay damages for circumstances beyond its control.

HNPCL is among the first eight fast track projects in the private sector. Soon after it took steps to implement the project, it ran into problems on various scores.

"If you go by figures, more than 90 per cent of the problems has been sorted out,'' the sources said.

Andhra Pradesh Chief Minister Nara Chandrababu Naidu had recently stated that the state government is giving allout support to the Hinduja power project. He had further stated that the matter was now with the cabinet and all problems are expected to be sorted out soon.

The company has already finalised the financial tie-ups with Exim Bank of Japan and Export Credit Agency of Britain. Sumitomo Mitsubishi Heavy Industries has been appointed as EPC contractor while the joint venture partner, National Power Corporation of Britain , is the operation and maintenance agency.

The Hindujas would take the majority stake in the company, slated to have a debt-equity in the ratio of 73:27.

UNI