The Nagarjuna project along with the Cogentrix project, which also has a 1000mw capacity, were conceived by the state in early 1994 and since then the two promoters have been awaiting clear guidelines and policy initiatives from the centre and the state governments. Both projects are coming up in the vicinity of Mangalore, in Karnataka.

The Karnataka Electricity Board (KEB) has suggested suitable changes in the project report, which have altered the project's cost structure to a degree. The proposed cost per megawatt is Rs 4.6 crore. The project is likely to be set up with a debt equity ratio of 3:1. Nagarjuna Fertilizers has decidedto take a majority stake of 51 per cent in Nagarjuna Power and the balance will be held by a foreign partner which is yet to be identified.

Meanwhile, the company is applying finishing touches to the power purchase agreement (PPA), to be signed with KEB, shortly. The outcome of the Supreme Court verdict on the Cogentrix project, clear policy directions from the centre on ammendments to the guidelines issued by the ministry of power in June and the forthcoming joint venture agreement between KEB and National Grid Corporation, the transmission company for Nagarjuna and Cogentrix, will all have a bearing on the future of this project.

The 1000mw thermal power project is being designed to suit the higher calorific value of Australian coal with a smaller boiler structure. The company has floated an international bid for an erection procurement and construction (EPC) contractor and a final decision will be taken shortly.

The Calcutta-based Design Consultants Ltd (DCL) along with the US-based Stone & Websterare the consultants for the project design. The financial consultants for the project are Chase Investment Bank while the legal consultants are Clifford Chance of UK.