IOC plans fuel-based power units

According to the IOC, the cost of the Panipat project is estimated at Rs 1,528 crore whereas that of Bhatinda plant has been pegged at Rs 366 crore. Both the projects would have a debt-equity ratio of 2:1 and the IOC will pick up 26 stake in them.

On estimates for levelised tariff on units generated from the power plants, the IOC and its financial adviser I-Sec are at variance. For the Panipat project, the levelised tariff fixed by I-Sec is Rs 1.84 per kilowatt-hour considering a fuel cost of Rs 2,322 per tonne whereas IOC estimates it at Rs 2.80 per unit.

In the case of naphtha-based Bhatinda unit, the tariff estimated by I-Sec is Rs 1.98 with fuel cost of Rs 7,544 per tonne and Rs 2.52 at import-parity price of Rs 10,949 per tonne. IOC has estimated the per-unit tariff at Rs 3.18.

In view of high generation cost, IOC proposes to enter into a power purchase agreement PPA with the state electricity boards SEBs to ensure generation of revenue. The financial viability, says IOC8217;s Project Appraisal Group, would depend on the PPA since the levelised tariffs seem to be higher than the prevalent rates charged by the SEBs from its consumers.

The IOC has also outlined measures to guard itself against a default of payment by the SEBs. The options, which are yet to be discussed with the respective SEBs, are:

An Escrow account on a portion of the SEB8217;s collections;

An irrevocable and unconditional revolving letter of credit opened by the SEB8217;s bank in favour of IOC .