Maharashtra gets approval to set up 2 power SEZs

PUNE: After bagging the most number of special economic zones (SEZs), Maharashtra is set to break new ground. It has received an in-principle approval from the ministry of commerce for two power SEZs.

The state’s industry development agency, Maharashtra Industrial Development Corporation (MIDC), is looking at setting up a 1,000-MW power plant in Chandrapur and a 250-MW plant in Raigad. The economic plans about the SEZs will be finalised in six months.

MIDC also has two gas-based power plants, one at Navi Mumbai and another at Butibori. The plants will be run by Reliance.

The idea of a power SEZ was emanated from the need for units located in an SEZ to be cost competitive. Since power is a significant part of input costs for all sectors, from IT to manufacturing, these power SEZs will help keep power costs down. Being SEZs, the power plants will be able to import fuel without paying customs or excise duties. The will help keep generation costs low.

“We have received an in-principle approval from the ministry of commerce for two power SEZs, a 1,000-MW plant at Chandrapur and a 250-MW plant at Raigad,” Rajiv Jalota, CEO, MIDC, said. He added that MIDC would not run the power plants, without committing on the manner they were proposed to run them.

MIDC will appoint consultants who are expected to submit their report by January ’07 on the detailed economic plans for these SEZs.

In addition to working out an economic plan for the power SEZs, the consultants will have to decide on the power tariff for non-SEZ or export oriented units (EoUs).

It is also expected that the consultants will address the issue of whether to run the power SEZs on a build-operate-transfer (BOT) basis.

While Mr Jalota declined to speculate on the manner on which these plants could be run, he admitted that imported coal might be a viable fuel for these plants.

MIDC already holds 240 acres in Raigad and will need to acquire another 10 acres for the proposed 250-MW power plant. Mr Jalota said they have enough land at Chandrapur for the 1,000-MW plant.

“The usual ratio is one acre of land for 1 MW of power,” he stated, adding that investments are usually calculated at Rs 3-4 crore per MW.

Observers maintain that the fuel will decide the investments required since it will be higher for a gas-based power plant, with imported gas, and lower for a coal-based plant.

However, they questioned the need to generate 1,250-MW of power by SEZs or export-oriented units in the state. They pointed out that several SEZs are planning to set up captive power plants at their own locations to ensure uninterrupted power supply. In such a scenario, it is not clear whether excess power will be sold to units in the state or wheeled to SEZs outside the state.

Government sources maintained that should the power have to be sold to non-SEZ or non-EoUs, it would have to be at pro rata rates. All these details will also be addressed by the consultants.