MUMBAI, DECEMBER 24: Cochin Refineries and Larsen & Toubro-PSEG of the US are all set to formalise their joint venture for power next month. The company, Cochin Petropower, will set up a 622 mw plant estimated to cost around Rs 3,000 crore at a 70:30 debt, equity ratio. The partners will hold 26 per cent each in the project with the balance proposed to be offered to financial institutions and the public.The plant will operate on the integrated gasification combined cycle (IGCC) technique which the L&T-PSEG combine will employ on another power project being planned by Madras Refineries. The capacity of this plant may be enhanced from 350 mw to 500 mw once the refinery is expanded from 6.5 million tonnes to 9.5 million tonnes. The feasibility study for this exercise is being undertaken by Engineers India and Foster Wheeler of the UK. L&T has identified power as a key area of operations in the future and plans to team up with oil companies for their projects. Apart from CRL and MRL, the firm will work with Indian Oil Corporation in its two plants being commissioned in Panipat and Sawli, Gujarat. L&T will hold a 24 per cent stake in both projects.
The company has also entered into a strategic alliance with IOC to identify opportunities overseas in areas like turnover maintenance for refineries. There are, however, no immediate plans to set up power plants in these countries. IOC and L&T, it may be recalled, have recently announced their intention to join hands in exploration and production of oil both here and abroad.
L&T also plans to bid for the EPC (engineering, procurement and construction) contracts for the two IOC power projects where it has a 24 per cent equity stake. It has joined hands with Mitsubishi to bid for the 500 mw Sawli plan where the other contenders are Babcock of the UK, Ansaldo of Italy and ABB. IOC still has not invited bids for the 301 mw Panipat project.
The Sawli project will have 26 per cent equity apiece from IOC and Mitsubishi of Japan. Apart from L&T, the other shareholders are the Gujarat government and Bharat Heavy Electricals with 13 per cent and 11 per cent respectively.
As for the Panipat plan, IOC and Marubeni will pick up 26 per cent each while ONGC will take 20 per cent. Four per cent has been earmarked for Engineers India while L&T will account for the balance. Both projects will use refinery residue as feedstock. Their capacities will be increased to 1000 mw once expansion of IOC's Panipat and Koyali refineries take place.
ONGC, sources say, could have opted out of the Sawli project as it has already decided to set up another plant in Gujarat along with the National Thermal Power Corporation.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.