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Chinese public sector company to set up power plant in AP

Our Correspondent in Hyderabad

Zhejiang Machinery and Equipment Import Export Corporation of the People's Republic of China has bagged the contract for setting up a multi-billion-rupee, 420 mega-watt, two-unit power project in Andhra Pradesh.

Andhra Pradesh Power Generation Corporation said in a statement that the project will be executed by ZMEC, a public sector company in China, on "build-and-transfer" basis.

The project cost offered by ZMEC at Rs 12.30 billion is the lowest, including spares but excluding interest during construction. The per megawatt cost works out to Rs 29.3 million.

The commissioning schedule for the project is 31 months for the first unit and 34 months for the second unit from the date of agreement, which is yet to be formally signed.

The project will be implemented with 100 per cent suppliers' credit. The competitive bids based on the criteria were evaluated by National Thermal Power Corporation and Kishore & Sastry Consultants.

Actual repayment of the loan will commence six months after satisfactory commercial operation of the units, and will be spread over 10 to 12 years thereafter. The loan will have three and a half years moratorium: that is, no payments are due from APGENCO till the units go into commercial operation.

The project, comprising stage-II of the Rayalaseema Thermal Power project, was first posed for Asian Development Fund assistance in 1995-96 and Japan's Overseas Economic Fund assistance in 1997-98. Both the agencies, however, did not evince interest. APGENCO then decided to implement the project with cent per cent suppliers' credit.

The power demand in the drought-prone Rayalaseema region -- the four southern districts in Andhra Pradesh -- is currently estimated at 1,000 MW. It is slated to go up to 1,400 MW by 2002. Hence, implementation of the stage-II of the Rayalaseema project is considered essential.

The state government communicated concurrence to APGENCO for taking up stage-II. With the addition of the two equal capacity units, there will be substantial improvement in the voltage profile in Rayalaseema region where agricultural loads are predominant.

Two units of 210 MW each under Stage-I were commissioned in March 1994 and February 1995 respectively at a total project cost of Rs 8.6 billion with the assistance from the Asian Development Bank, with provision for future expansion by two units of 210 MW each. The state government began implementing stage-II from 1994 after obtaining the mandatory clearances.

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