Ahmedabad: The city-based pharmaceutical, power generation and distribution conglomerate Torrent Group’s 1,100MW power project has been delayed by more than six months with the group claiming that this is because one of its suppliers does not have adequate manpower.
The first block of the project (each block will generate 367MW) coming up at village Akhakhol, near Surat, was set to start generating power in September. People familiar with the matter said thatthis would not happen before March.
“Though all equipment has been lying at the project site, we have not been able to commission the project in September, as scheduled. The problem is that our engineering, procurement and construction (EPC) contractor Siemens AG of Germany does not have enough manpower to push it through on time,” said a person at Torrent familiar with the development.
A?substation near Muzaffarnagar, Uttar?Pradesh. Gujarat currently faces a shortage of 3,000MW against peak?demand
Siemens spokesperson Kavita Ghatge did not respond to an email questionnaire. And Torrent’s spokesperson refused to comment.
The two other blocks of the project—each of 367MW capacity—will be commissionedlater. These two blocks were to be commisioned by the end of the year.
The delay will mean Gujarat has to wait a while for the power situation in the state to improve. The state currently faces a deficit of 3,000MW (against peak demand).
Gujarat’s minister for energy, petrochemicals and finance, Saurabh Patel, confirmed that there has been a delay in commissioning of the project. “These things do get delayed, but we are hopeful that it (the project) would be commissioned soon, and the state will be able to benefit from this mega power plant.”
Spread over 39.55 ha, the project is located about 2.5km off the National Highway No. 8 that connects Mumbai and New Delhi, and is 28km from Surat city. It will cost around Rs3,096 crore. The Torrent Group has already contributed Rs279 crore towards its equity commitment in the project. Debt for the project has been arranged, and it (the project) achieved its financial closure in September 2004.
A consortium of banks and financial institutions led by Infrastructure Development Finance Co. (IDFC) has financed the project. The members of the consortium include Industrial Development Bank of India Ltd (IDBI), Power Finance Corp. Ltd (PFC), Punjab National Bank (PNB), UCO Bank and Canara Bank.
The 1,100MW combined cycle power project is a backward integration move of Torrent Group to secure a reliable source of supply for Ahmedabad and Surat, where it distributes power. Currently, Torrent supplies around 2,750 million units (mu) to Surat, the diamond and powerloom capital of India. The demand for power in Surat is expected to increase marginally to more than 2,923mu in 2007-08. Torrent’s existing generating facilities, however, are not sufficient to meet the demand from consumers,?and the group buys around 4,105mu of power.
Once the new power project becomes operational, Torrent Power, the group’s company in the power business, can supply power to Surat and Ahmedabad from its own capacity. It requires 500MW of power for its Surat operations, 400MW for Ahmedabad and has already committed 100MW to PTC India Ltd.
Torrent has also entered into an agreement with Indian Oil Corp. Ltd (IOC) to buy 1.6 million standard cubic metres per day (mscmd) of liquefied natural gas. IOC will supply natural gas from Petronet LNG Ltd, for which it is one of the gas marketing companies. “At a time when there is an acute shortage of natural gas in the country, Torrent has been able to tie up for 6.8mscmd of gas, more than it actually requires. It needs around 5mscmd for the Akhakhol project and another 0.5mscmd for its 110MW gas-based power plant at Vatva in Ahmedabad,” said a person who trades in natural gas.
The extra gas gives Torrent an option to increase capacity in its gas-fed power plant at Akhakhol.
However the company may need fresh approval from the government, even as it works towards completing the project. This is because once completed, the plant could be in a position to generate up to 1,145MW in certain conditions against its capacity of 1,100MW. “It could need a fresh approval from the ministry of environment and forest,” said a person who is familiar with building and commisioning power plants who did not wish to be identified.
Power projects in India are configured and governed by laws that do not allow for producing more than the statutorily stipulated capacity, without getting necessary legal clearances in advance. “Torrent will have to go back to the ministry of environment and forests to get legal clearances for higher capacity,” this person said.