The one-million tonne 100 per cent export-oriented venture in Orissa, which has already been substantially delayed, is to have a 60-mw co-generation plant. The plant is likely to be set up on a build-own-operate (BOO) basis.

Sources said this may bring down the project cost by over Rs 250 crore. Tata Electric Companies, Larsen & Toubro and a French power multinational are in the fray to bag the mandate for the project. The successful bidder is likely to be asked to become an equity partner in the power company, they said. The company had earlier planned to attain financial closure by 1997-end, but, sources said, it is now expected by the next calendar year. Warburg Dillon Read is the financial advisor to the project.

Company officials said the project cost has not gone up due to the delay because of the significant drop in steel prices and the depreciation of the rupee. The targeted debt-equity ratio now is 3:2, with a capital base of over Rs 1,600 crore. While Alcan will directly hold 35 per cent equity, its Indian subsidiary Indian Aluminium Co will hold another 20 per cent. Norsk Hydro of Norway will hold the balance 45 per cent, while the company may offer shares to the public at a later date.

Sources said land acquisition for the project is at an advanced stage and construction work is likely to begin from the 2000-end. Leases for the bauxite mines have already been received.

Selection of the engineering-construction-procurement management (EPCM) partner is at an advanced stage and, it is learnt, that US-major Bechtel and the public sector Engineers India are among the strong contenders for the mandate.

For exporting its alumina, the company has already arranged for a dedicated berth at the Vishakhpatnam port.

Both Alcan and Norsk Hydro will lift a major portion of the one million-tonne alumina produced by the company for its smelters. While Alcan is coming up with a smelter in Quebec, Canada, the Norwegian transnational is setting up another smelter in the Middle East.

Sources said both Alcan and Norsk Hydro will require additional alumina from 2005 onwards and hence were not too bothered regarding the delay in the venture. Utkal Alumina will take four years to complete from zero date.

The project was to have the Tata group as an equity partner in the venture, but India's largest business group walked out of the project as part of its ongoing group restructuring.

Analysts said financing the project will become easier now with international alumina pricing jumping to over $300 a tonne levels. Over the last two years, alumina prices had dipped to well below the $250 per tonne level, making international financiers sceptical about putting in their money in alumina projects.

The Utkal Alumina project is one of the three alumina projects that were proposed to be set up in the early 1990s. Of the other two, one was to be promoted by L&T-Alcoa in Orissa, from which Alcoa since has walked out, while the other one was to be set up on the west coast by Raytheon, which too has opted out.