Rajpura super critical thermal plant owned by Larsen and Toubro is set to have a new owner with Gautam Adani’s Adani Power Limited agreeing to pay Rs 3,300 crore upfront for the 1,400 Megawatt (MW) project and to also bear all loans and debts due on the project. In a meeting of top executives, L&T and Adani Power are expected to seal the deal in Mumbai on Friday.
L&T is one of the largest construction and infrastructure development companies in the country with Adani Power Limited being one of the fastest-growing power generation company.
Since commissioning, L&T had been keen to sell its equity in the project. The plant — commissioned around two years ago and set up at a cost of Rs 9,600 crore — has been facing teething problems since its commissioning two years ago and sources said, the taking over of a new owner could take it out of the red.
The major portion of the funds raised from the financial institutions is to be returned.
“L&T builds and develops projects. We don’t run projects that we build, particularly thermal plants. Talks have been on with major business houses for its sale for long,” said a senior executive of L&T hinting that a deal had been inked with the Adanis for handing over its major equity.
The plant is said to be the best super critical plant (these are more efficient) built indigenously and under a Power Purchase Agreement (PPA) signed with the Punjab State Power Corporation Limited (PSPCL), it was to supply power to the utility for 25 years.
At one time, L&T considered adding another 700 MW capacity, but considering the lengthy process for clearances it decided to stay with two 700 MW units.
Plant working at only 50% capacity
With Punjab having a problem of plenty in power, the plant has been operating at 50% plant load factor (PLF). It is still to be linked with Mandi Gobindgarh railway station 3-km away. Coal is transported on trucks, leading to 20-25 paise increase in power generation cost per unit. This is borne by the company with PSPCL refusing to pick the tab. “The Adanis have the means to deal with all the hurdles that have impeded the plant’s smooth functioning. The project will run well now,” a senior PSPCL officer told HT.