Finally, Goindwal Sahib thermal plant to get going

The first unit of the 540-megawatt (MW) Goindwal Sahib thermal plant, owned by GVK Power Limited, is set to start operating by January 31.
A Swiss company, IMR Metallurgical Resources, has agreed to supply coal from South Africa to the project in Tarn Taran district.(livement)
A Swiss company, IMR Metallurgical Resources, has agreed to supply coal from South Africa to the project in Tarn Taran district.(livement)
Published on Jan 26, 2016 12:16 PM IST
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Hindustan Times | By, Chandigarh

The first unit of the 540-megawatt (MW) Goindwal Sahib thermal plant, owned by GVK Power Limited, is set to start operating by January 31.

A Swiss company, IMR Metallurgical Resources, has agreed to supply coal from South Africa to the project in Tarn Taran district. The company also has been allotted 12 lakh tonnes of unused coal by Coal India Limited (CIL), to be procured at a higher rate than the prevailing prices, till the imported coal arrives. The amount of unused coal allocated to GVK will help the project run for about six months.

The project is running 20 months behind schedule as the commissioning, as per the power purchase agreement signed with the Punjab State Power Corporation Limited (PSPCL), was to take place in May 2014. However, the coal block owned by GVK in Tokisud (Jharkhand), which was to supply coal for the Goindwal plant, was cancelled as the Centre decided to go for fresh allotment of all coal blocks in the wake of the coal scam.

“As all our efforts to arrange coal from alternative sources proved futile, we turned to foreign sources,” said a source in GVK Power Limited, adding that an agreement for two-and-a-half years had been made with the Swiss firm. Had the project not become operational by March this year, it would have turned into a non-performing asset (NPA), the source added.

The cost of coal, as per CIL prices, is `5,500 per tonne, but the cost of unused coal is 10-20% higher, which would lead to rise in generation cost. After the commissioning of the project, GVK is expected to approach the Punjab State Electricity Regulatory Commission (PSERC) for fixing per-unit cost of the power to be supplied to the PSPCL.

After GVK’s coal block was cancelled in May 2014, it approached the PSERC, seeking extension in the date of commissioning. As the decision remained pending, the PSPCL approached the PSERC for getting GVK’s bank guarantee to the tune of Rs 100 crore encashed. GVK then opted for arbitration. The case is pending with the three-member arbitration panel.

Jinxed project

The project was conceived in 1994 at a cost of a few hundred crores (which has escalated to a whopping `4,000 crore). An MoU (memorandum of understanding) was signed between GVK Power Limited and erstwhile Punjab State Electricity Board in 2000, but the project failed to take off due to problems regarding coal availability.

In 2002, GVK tied up with Eastern India Coal Limited, but did not sign a coal supply agreement as the landing cost was very high. The project was revived in 2008 and the MoU was re-negotiated. A fresh power purchase agreement was signed between PSPCL and the promoter. Construction began in 2010. In March last year, GVK announced that the first unit would be rolled out in March 2013, but it missed the deadline. The revised deadline of May 2014 was also not met as coal could not be arranged.

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  • ABOUT THE AUTHOR

    Gurpreet Singh Nibber is a special correspondent with the Punjab bureau. He covers agriculture, power sector, Sikh religious affairs and the Punjabi diaspora.

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