Surana Power Ltd is confident of commencing generation of electricity from its upcoming 420 MW plant by next year because the project will not face any fuel supply issues. Surana Power has a captive coal mine in hand.

The company, a wholly owned subsidiary of the NSE-listed Surana Industries Ltd, is putting up a Rs 2,400-crore project near Raichur in Karnataka. “The project is 50 per cent complete,” says Mr Dinesh Surana, Managing Director, Surana Industries. The public sector power equipment major BHEL will supply boilers and turbines for the two units of 210 MW each.

Surana Power was recently in news when the rating agency CARE assigned Surana’s Rs 1,800-crore long-term bank loans a `B' rating. “The rating is primarily constrained by poor operational performance of the existing 35 MW power plant and resultant strain on its cash flow position. The rating is also constrained by lack of experience of the group in execution of large-scale projects, presence of coal purchase agreement with a group company which is venturing into coal mining, power offtake and price risk associated with its power purchase, agreements, regulatory risk and forex risk associated with coal imports,” CARE said.

However, the rating agency also noted that the rating “derives strength” from favourable demand scenario for electricity in south India and the achievement of financial closure of the project.

Asked for a comment on this, Mr Dinesh Surana said the 35 MW plant has a fuel supply agreement with Coal India Ltd, but Coal India has not been able to supply the fuel. As a consequence, Surana Power had to buy coal from abroad, which is costly.

The 35 MW plant is meant for captive use, to supply electricity to the steel plant run by the Rs 1,223-crore Surana Industries. “We are using the plant to supply just as much electricity as we require,” Mr Surana said, adding that while the captive power plant was not running to full capacity, it was not making a loss either.

mramesh@thehindu.co.in

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