State ties up Rs 6,771-cr loan for power generation

MUMBAI: Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) on Tuesday signed an agreement with Mahagenco, the Maharashtra state power utility’s generation arm, to fund its expansion programme.

PFC and REC will together lend Rs 6,771 crore to help the state raise its capacity by 2,000 MW in the next three years. The agreement to this effect was signed at the state secretariat in the presence of chief minister Vilasrao Deshmukh and senior officials of the two corporations.

Mahagenco plans to set up nine gas and coal based power plants to add around 7450 MW to its existing 14,000 MW capacity. Four of the nine projects, that would be taken up on a fast track, would add 2,000 MW.

At an average cost of Rs 4.30 crore/MW, the state would need an investment of Rs 8,610 crore for these projects. The cash-strapped state government has roped in PFC and the REC for the funding. The state will contribute 20% of the total cost, while the balance will come as loans from the two agencies.

REC has agreed to finance up to 80% of the estimated cost — which is around Rs 3,300 crore — of expansion of the 1,000 MW thermal plant at Bhusawal. PFC has sanctioned term loans for three separate projects at Parali, Paras and Khaparkheda costing Rs 830 crore, Rs 888 crore and Rs 1,753 crore, respectively.

The new units would start generation between November’ 08 and November ‘09. With this the state is expected to make good its power shortage significantly.

According to current projections, Maharashtra’s power deficit is likely to shoot up to 10,168 MW in another five years, from the current level of 4,000 MW to 4,500 MW. “The projects signed today would help the state mitigate the power shortage,” Mr Deshmukh said.