Aban Lloyd seeks fuel quality guarantee from Indian Oil
TMA Raman
CHENNAI, January 13: Aban Lloyd Chiles Offshore which has signed a fuel supply agreement with Indian Oil Corporation has sought assurance from the oil company that it will guarantee the quality of fuel.Apparently Aban will require 1,57,700 metric tonnes of naphtha per annum for its 126 MW power project now shifted to Ennore from the original site selected at Manavasi near Madurai. While Aban has signed the fuel supply agreement with IOC, it is worried that the quality of fuel is not part of the agreement. The agreement itself has been developed by the oil coordination committee of the ministry of petroleum and natural gas at the centre and oil companies reportedly have no say in the matter of clauses governing the fuel supply agreement. Since tariff is based on assured quality of fuel, independent power producers (IPPs) feel the quality of fuel has to be assured especially in terms of specifications. This is the item IOC has not included in the agreement, but apparently has agreed to discuss with IPPs
and resolve any differences. As part of the agreement Aban will also be required to pay up front Rs 5 lakh per MW as cash and the balance of Rs 7 lakh per MW as bank guarantee to IOC for development of infrastructure facilities for fuel supply. However, due to the shift to a coastal location, Aban is getting the benefit of reduced commitment charges of Rs 12 lakh per MW applicable to all coastal-based power plants. But what benefit Aban gets from this may be lost out on the higher development charges it has to reckon with at Ennore as compared to the original site at Manavasi. The company is keen to acquire 40 to 50 acres of land at Ennore so as to take care of any future expansion plan as well. For the power project it will be using around 20-25 acres in the first place and has to get the land allotted from the Tamil Nadu Industrial Development Corporation Ltd (Tidco). Tidco is said to be asking around Rs 4 to 5 lakh per acre at Ennore and Aban reckons that land acquisition costs could go up
substantially. Meanwhile, Aban wants to begin power purchase agreement (PPA) negotiations with the Tamil Nadu Electricity Board and hopes to conclude it within a month or two. The company has to achieve financial closure within six months from the time of initialling the PPA. The engineering, procurement and construction (EPC) contractor is expected to be finalised within the next month or so. Meanwhile, Aban is discussing through ICICI to finalise the debt component of the Rs 390 crore project which has a debt equity ratio of 70:30. Of the equity portion, Aban will chip in 26 per cent, its consortium partner Hyundai Engineering 26 per cent and the balance will be given to NRIs, FIIs and others. Aban will also have to reckon with the water problem at the Ennore site. It expects to sort this out through discussions with Metro Water, Tidco and TNEB officials.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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