Pipavav Power Project: GSPC signs pact with REC

Mumbai: GSPC Pipavav Power Company GPPC) has signed a loan agreement with Rural Electrification Corporation Ltd (REC) to put the 700-MW Pipavav power project back on track.

REC would provide a loan of around Rs 2,000 crore for the project, which costs Rs 2,334 crore.

State energy and petrochemicals minister Saurabh Patel said the Pipavav power project was conceived by the then Gujarat Electricity Board way back in 1990 based on the Panna-Mukta-Tapti (PMT) gas committed by the Centre. Since the gas allocation was not coming through, the project implementation remained uncertain.

Incorporated as a special purpose vehicle (SPV) by the Gujarat State Petroleum Corporation (GSPC) and the Gujarat Power Corporation with the initial equity, the GPPC will see induction of other equity partners at a later stage.

For the EPC contract, Bharat Heavy Electrical Limited (BHEL) has been issued a letter of intent after a selection through the international bidding route.

While the GSPC would arrange for the gas, Gujarat State Petronet Limited would transport the gas required for the power project. Once commissioned by end of 2010, the total electricity generated from the project would be sold to Gujarat Urja Vikas Nigam Ltd to bridge the demand-supply gap of electricity in the state, a company release stated.

Considering the size of the project, the company has also applied for the mega power project status.

Being an environment-friendly project as compared with a coal or lignite-based power project, the GPPC has also initiated the process to register the project with the United Nations Framework Convention on Climate Change (UNFCCC) to avail of the carbon credit benefits.