Cheyyur Plant Financially Not Viable
20 May 2015
In addition to the environmental concerns over the proposed 4,000 MV supercritical coal fired Ultra Mega Power Plant (UMPP) at Cheyyur in Kancheepuram district, a new study by United States-based Institute for Energy Economics and Financial Analysis(IEEPA) observed that the project in not financially viable.
The IEEPA has conducted the study for the Indian Institute of Public Policy (IIPP) and Ahmedabad-based financial advisory firm Equitorials had contributed to the study. The
report was made public here on Wednesday.
Based on an analysis of Cheyyur plant's business assumptions, the author of the study Tom Sanzillo, Director of Finance, IEEPA, concluded that the power plant will place an upward pressure on electricity prices in Tamil Nadu.
The author said the ratepayer tariff required to build and operate the plant using imported coal would be Rs 4.9 per unit in the first year of commissioning, which in the year 2021 with a levelised price of Rs 5.95 over 40 years of life of the plant.
Mr Jai Sharada of Equitorials said early this year the Union power ministry terminated the bid process for the plant because sever out of eight applicants pulled out of the competition citing unfavorable bidding rules and their inability to secure bank financing.
The truth was companies had issues with build, operate and hand over and tariff rates.
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