UNOSUGEN Gas Power Plant

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In October 2009, Torrent Power announced and expansion program for for their Sugen Mega Power Project (1147.5 MW which was commissioned in August 2009). Known as UNOSUGEN, the standalone project involved setting up a 382.5MW gas-based combined cycle power plant at the existing site at Village Akhakol, in Kamrej Taluk, in Surat District in Gujarat. Expansion would be carried out within the 100Ha of land already available within the power plant. Source of natural gas for this expansion project would be KG basin. Gas requirement would be 2.0 MMSCMD.(It maybe noted that the primary Sugen plant had access to all major sources of Natural Gas / LNG in the country through the pipeline connectivity of Gujarat State Petronet Limited (GSPL). Natural Gas for the Sugen project had been sourced from the KG basin fields of Reliance, PMT gas fields and the Petronet LNG’s plant at Dahej). Water requirement of about 10,656KLD for the expansion projects would be met from Tapi river through the existing system and through existing allocation to Sugen plant.The project has received MEGA Power Project status from the Ministry of Power, environmental clearance from MoEF and connectivity approval from Central Transmission Utility. The power generated from the 382.5 MW power plant was expected to meet 278 MW additional demand of Ahmedabad,Gandhinagar and Surat distribution through the Torrent Power Limited-Distribution (TPL-D). The residual power would be sold to Power Trading Corporation (PTC) for interstate and other sales. Since Unosugen was categorised as an expansion project of existing Sugen plant, the tariff would be determined by the Central Electricity Regulator CERC. The power purchase agreement for the project had not been ratified by the regulator at the time of collection of this information. The state regulator noted that, while, there was no bar in the Electricity Act, 2003 on the distribution licensee to establish their own generating station, the MOU had been executed between Torrent Power Limited-Distribution (TEL-D) and Torrent Power Limited (UNOSUGEN) which were two divisions of the same entity. Hence, it was not a valid long-term power purchase agreement as the same was not enforceable in case of default by any division of the same entity. As such, the MOU in present form couldnot be approved.Torrent Energy Limited was directed by the State Regulatory commission to approach the central regulator for adoption of the Tariff for procurement of power from its own generation unit.In July 2010, a fixed-price, fixed-time turnkey EPC contract, had been awarded through an international competitive bidding process to Siemens of Germany.TEL clarified that they have ensured the competitiveness of the project cost by identifying the EPC Contractors through International Competitive Bidding (ICB) process.Siemens would also supply the main components including gas and steam turbines, a generator and the entire electrical, instrumentation and control systems.Siemens and Torrent had formed a 50:50 joint venture to provide operation and maintenance services for the plant (Sugen as well as Unosugen). The project cost was estimated to be approximately USD 407.3mn (INR 18330mn @45 INR/USD). Financial close took place on 31st March 2011 at a Debt/Equity ratio of 70/30. Torrent Power financed this project through an equity contribution of USD 122.2 million (INR 5500 @45 INR/USD) and a 15-year term loan of USD 285.1 million (INR 12830mn @45 INR/USD). The debt was arranged by IDFC and attracted 3 lenders, Bank of Baroda, StateBank of India, and KfW-Germany. The construction started in July 2010 and by March 2011, 36% of the EPC work had been completed. The project was expected to be completed by July 2013.