A discom drowning in red ink rarely hungers for un-viable power plants set up by private parties. Especially if it has sold off its own plants in the past due to a cash crunch. But then, we are talking about the Uttar Pradesh Power Corporation (UPPCL).
The Uttar Pradesh electricity regulator may not yet have made up its mind on Lanco Infratech’s request to rework tariff for its 1,200-MW Anpara C project, but the government seems to have decided on taking up the company’s offer to sell it.
“We want to either buy out the project on our own or with NTPC. We will go through all the pros and cons before making the final decision,” a state energy sector official told FE. The government is conducting informal talks with Lanco even as it challenges the unilateral termination of the power purchase agreement, he added.
What is the state’s rationale for buying out the project? “Anpara C was India’s first project awarded under tariff-based bidding in 2006. Lanco won the bid quoting the lowest-ever tariff of R1.91/unit. It would be difficult for the power regulator to increase the tariff in a competitive bid project. In that case, the only option is for us to buy out the project,” said a UPPCL official.
The finances would work out like this: “At the cost at which it was set up – R4 crore per MW — the acquisition would cost a total of R4,800 crore,” he said.
Since Lanco’s R4,000-crore loan will get be transferred to us, only the balance R800 crore needs to be arranged. The state government could either lend this money or have a partnership with NTPC. If we alone buy it out, UPRVUN will run it. In case of a partnership, NTPC can run it and provide the entire power to UP. We are talking to NTPC and hope to come to a decision soon,” he said.
The region around Sonebhadra district, where the Lanco project is located, is home to many thermal power stations, including three of NTPC and two of UPRVUNL, the official added. “It will be easy for us to manage it as several projects there. Coal too would cease to be a problem,” he claimed.
When contacted, an NTPC official said while the company was not averse to the buyout, there was no formal offer from the UPPCL yet.
Earlier, UP had to sell its thermal power plants at