GMR, CLP to jointly bid for Sasan project

Mumbai, May 18 | Updated: May 19 2006, 05:30am hrs
The power ministry's decision to allow consortium model to participate in the bidding for the upcoming ultra mega power projects has come quite handy for the Bangalore-based GMR Group and China Light and Power (CLP) to join hands together. The duo has inked a memorandum of understanding (MoU) to jointly bid for the 4,000 mw pit head domestic coal fired ultra mega project at Sasan, Madhya Pradesh.

In the Rs 18,000 crore project, GMR group and CLP propose to contribute Rs 3,000 crore each towards the total equity of Rs 6,000 crore, while the debt of Rs 12,000 crore would be raised from various sources. This apart, GMR group and CLP would make an investment of around Rs 1,200 crore for the development of captive coal mine and the coal production from the same. If needed, GMR group and CLP may explore option of setting up of a separate company for the development of captive coal mine and the coal production.

B Vanchi, director of GMR Energy Ltd, told reporters on Thursday that "CLP and GMR will submit a joint bid for the 4,000 mw Sasan project and co-develop the project in the event of award. Both CLP and GMR will have equal ownership in the project."

Mr Vanchi and Rajiv Mishra, CEO of CLP Power India, admitted that the power ministry's move to offer the payment security mechanism (PSM) , incorporated in the request for qualification, would help in making the projects viable and render them a workable proposition. The PSM comprises letter of credit, escrow account and allowing the developer to sell power to the high tension consumer in the event of default. The duo, however, made it clear that the power ministry should stick to its PSM in the request for proposal (RFP).

Grand Alliance

GMR, CLP to have equal ownership in the ultra mega power project
They would jointly invest in the captive coal mine and coal production
The two companies may form a separate company to develop captive coal mine and produce coal

Mr Vanchi said the per unit tariff would be competitive. However, he declined to divulge further details in this regard. Mr Vanchi and Mr Mishra said the partnership between the two companies is project specific. FE had reported on May 17 that GMR would bid for the Sasan project. Sasan is one of the seven ultra mega power projects proposed by the power ministry to be developed by the private sector.