Rosa Power on revival path as REL takes reins

MUMBAI: The Anil Ambani-controlled Reliance Energy (REL), which took over the Rosa Power project from the Aditya Birla group, has breathed fresh life into the long-pending project. REL has roped in IDBI Bank as the lead arranger of finance for the proposed 1,200 mega watt (MW) project at Shahjahanpur in UP. The Rs 5,500-crore project���s debt-equity ratio has been fixed at 80:20. Sources said IDBI has initiated talks with other banks to raise almost Rs 4,400 crore as debt for the project.

For the transportation of coal from Jharkhand to the project site ��� over a distance of 850 km, Rosa Power Supply Company (RPSCL) has signed a coal transportation agreement with the Indian Railways on Tuesday (January 23).
The ministry of coal had already ensured a long-term fuel supply linkage for the project. Coal supply agreement is expected to be signed between RPSCL and Central Coal fields very soon.

The coal will be supplied from Ashoka Mine in North Karanpura blocks of Central Coalfields, a subsidiary of Coal India. Water use agreement for the project, which will be catered by Garrah river, had also been signed with the state government.

The Rosa project, initially a 51:49 JV between the Aditya Birla Group and PowerGen of UK, was initiated in the early ���90s. The earlier estimates had pegged the project cost at Rs 2,603 crore with a debt component of Rs 1,814 crore and an equity of Rs 789 crore. The government had acquired 595 hectares for the project.

However, the cost of the project had gone up with an indefinite delay in the project implementation. The project had also faced problems in coal linkage also. In November 2006, REL had taken over project and signed power purchase agreements (PPAs) with the state government.

���Due to the severe power shortage and the huge demand-supply gap, the government has approved the capacity upgradation proposal of the Rosa project from the initial 600 MW to 1,200 MW. Construction work on the project will commence shortly as it is slated to be commissioned by 2010. The thermal plant has got mega project status,��� said an
REL spokesperson.

REL can sell electricity at the rate of Rs 2.69 per unit to Uttar Pradesh Power Corporation (UPPCL). The project, with a capacity of 1,200 MW, will generate about 900 crore units annually. Construction of the plant is expected to commence in March 2007.

This is the second major investment into the state���s power sector after REL���s proposed 7,000 MW gas-based mega power project at Dadri with an investment of Rs 28,000 crore. The project is hanging fire due to lack of gas supply at an economical rate.