DB Power Limited (Chattisgarh)

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In January 2008, the Chattisgarh Government, signed a MoU with DB Power Limited (DBPL), a SPV of the media company Dainik Bhaskar Group for development of a 1200 MW coal-fired sub-critical thermal power plant in Baradarha village in the Janjgir Champa district of Chhattisgarh. The project was planned to be executed in two phases, each of 600 MW. DB Power was currently developing the 1st phase of 600MW. The land required for the project was 1077 acres out of which the company has acquired 548 acres (around 50%) of land till end of February 2011 which was sufficient to accommodate the main plants of both Phase-I & II. The acquisition of balance land was under progress. Water requirement, estimated at 40 million cubic meters per annum, would be met from Mahanadi River for which the company had received approval from Water Resource Department, Government of Chhattisgarh. DBPL had received all major clearances like environment clearance, chimney clearance etc. However, environment clearance for captive coal mining was pending. For evacuation of power, DBPL would build a 15 km long, 400 kV transmission line upto PowerGrid Corporation of India Ltd. (PGCIL)'s proposed Kotra sub-station. The primary fuel for the project was domestic coal. DBPL's coal requirement had been estimated to be around 5.298 Million tons per annum (MTPA). The company had received Letters of Assurance (LoAs) from South Eastern Coalfields Limited (SECL) and Mahanadi Coalfields Limited (MCL) each for supply of 2.497 MTPA of grade ‘F’ coal. Apart from these coal linkages, DBPL had been allotted Durgapur-II/Sariya Captive Coal Block which would be able to supply 2 MTPA of coal. The coal from MCL would be available on tapering basis- as the output of captive coal block would increase, coal supplied by MCL would reduce. Captive coal mine, when fully operational, would be able to meet around 38% of the coal requirement of DBPL. Fuel needed to be transported from the mines of SECL and MCL to Robertson station over a distance of about 80 km and 115 km respectively. From Robertson station, the company proposed to build a 15 km long railway spur to the plant site and cost for the same had been included in the project cost. After the Fuel Supply Agreement (FSA) were entered into with SECL & MCL,the company would enter into a suitable Coal Transportation Agreement (CTA) with Indian Railways.The company had awarded EPC contracts for Boiler-Turbine-Generator (BTG) and Balance of Plant (BOP) to Bharat Heavy Electrical Limited (BHEL) and L&T respectively. The power generated from the project of 600MW was expected to be sold to entities including state electricity boards, state owned utility companies, power trading companies. As per the Implementation agreement (IA) signed with Government of Chattisgarh on 6th August 2009, DB Power would provide 7.5% of the net power generated by the project to an agency nominated by the state government. The tariff or energy charge would be determined by the appropriate Electricity Regulatory Commission. Under the IA, the state government had the first right to purchase power up to 30% of the aggregate capacity at the tariff approved by the ERC.Further, DBPL had signed a long-term (25 years) PPA with PTC for 290 MW with a Base Tariff of INR 2.89 per kWh (net of 2.5% trading margin). The PPA with PTC provides for compensation of fixed charges at INR 1.74 per kWh if PTC was not able to sell the capacity provided DBPL was able to achieve plant availability of 85%. Also if PTC sold power at higher than Base Tariff, DBPL would get 90% of the surplus amount. The PPA with PTC allowed for increase in coal price by about 4% per annum. The balance (of both phases of 1200MW) capacity of around 467 MW was untied and a part of this capacity would be sold on merchant basis, although negotiations for a PPA with GMDC were reportedly under progress. The cost of the Phase-I of the Project (600MW) was estimated to be approximately USD 737.8 million (INR 332