The other independent power producers that had responded to HPCL's global tender included Lurgy of Italy and a consortium of Bombay Surburban Electric Supply (BSES) and Bharat Heavy Electricals Ltd (Bhel). The national oil company is now in the process of screening the bids, before selecting a foreign partner for the refinery-residue-based power plant. The foreign partner will be offered a 24 per cent stake in the venture. HPCL and the Andhra Pradesh State Electricity Board (APSEB) have opted for 26 per cent stake each in the power project, a detailed feasibility report for which is now being readied.

FIs and other consumers like APSEB are expected to pick up the remaining 24 per cent of the Rs 662.4crore equity capital. The rest of the Rs 2, 208 crore project cost will be funded out of borrowings. The project will have a debt to equity ratio of 7:3.

The plant, like the venture envisaged at HPCL's proposed Bhatinda refinery, will be based on refinery residues like furnace oil and other heavy-ends.

Like all other power ventures based on the integrated gassification combined cycle technology, the Visakhapatnam plant will have an in-built ability to switch to gas as a fuel subsequently. The power plant technology is significant in the light of HPCL's aborted effort to put up an LNG - based power plant with Total of France. Total is still conducting a feasibility study for putting up an LNG import facility with HPCL as a partner along the east coast, but is known to have turned lukewarm towards the proposal for an associated power plant.

Should the Total and HPCL partnership for importing, storing and regassifying LNG fructify, the refinery-residue based power plant could easily become a customer forthe gas. Insiders in HPCL admit that the Visakhapatnam power plant would have provisions for doubling its capacity to 1,000 mw.

At that point, an alternative fuel will become necessary, since the power plant envisaged now will feed on the output of HPCL's expanded refinery at Visakhapatnam.