The Tamil Nadu Electricity Board will implement the Rs 8,000-crore, 1,600-MW Udangudi power project by itself with the financial support of the State Government, according to an official press release.

The power project had originally conceived as a joint venture between BHEL and the TNEB, both of which had floated the Udangudi Power Corporation Ltd, to implement the project.

The joint venture had been floated in December 26, 2008. But the project had not made any headway.

CM review

The State Government had decided to go it on its own following a review of the project by the Tamil Nadu Chief Minister, Ms J. Jayalalithaa, on Thursday, the release said. The State Government will fully fund the project to come up in Tuticorin.

Under the original plan, the 2x800 MW Super Critical Thermal Power Project was to have been funded through debt and equity with both partners holding a 26 per cent stake each and 48 per cent to be brought in by a financial institution or a private partner. But except for BHEL and TNEB earmarking Rs 32.5 crore each as project funding, there had been no progress and even the debt:equity ratio had not been decided.

No action had been taken to implement the project including getting long term coal linkage which is essential to get environmental clearance from the Centre.

One of the reasons for the project not taking off was the lack of cooperation from BHEL, the release said.

Following the review by the State Government, it had been decided that the project could not be implemented through the joint venture.

Therefore, the State Government has decided to fund the entire Rs 8,000 crore as investment equity.

Also, since the Union Coal Ministry has not passed orders on coal linkage, the project would use imported coal, and seek the Environment Ministry's clearance, the release said.

The project would benefit from tax incentives under ‘Mega Power Status' and Tamil Nadu will get the entire 1,600 MW of power supply.

>rbalaji@thehindu.co.in

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