RIL is interested in the 2000 mw mega power project proposed by the ministry of power recently for which the Central government has agreed to give duty-free import of capital equipment.

An industry source confirming this said the company will definitely bid for this project in view of the presence it already has in Tamil Nadu through the Jayamkondam lignite-based 500 mw power project.

RIL has broached to the TN government to hike the capacity of the Jayamkondam power project to 1000 mw in the first stage itself. The argument is that it will be advantageous to the TN government since power equipment market has witnessed a price crash and the benefit of low equipment prices can be availed of in the first stage itself.

The Jayamkondam project is planned to produce 1500 mw of power using lignite asfuel but originally the plan was to start each phase with 500 mw. However industry sources say since RIL will begin the second phase of 500 mw in the next five years, the TN government will have to reckon with capital cost escalations then. Hence the RIL suggestion to upgrade the project.

It is learnt that the TN government is considering the RIL proposal but no firm decisions have been taken so far in view of the escrow imbroglio in which the Tamil Nadu Electricity Board has been caught. IDBI has evaluated escrow capacity of TNEB to be 2500 mw and not 4,000 as claimed by the board. It is also learnt that TNEB is committed to give escrow cover to Jayamkondam power project and hence the TN government hesitation to straightaway agree to upgrade the RIL project to 1,000 mw in the first stage itself.

The power purchase agreement with RIL for the Jayamkondam project is to be signed in about two weeks, it is said. Also sources say the Jayamkondam project will have the lowest tariff for any power project with areal average tariff of Rs 1.06 per unit and tariff for the first five years likely to be Rs 3.28 per unit.

RIL puts the cost of the project at Rs 4 crore per mw for power and Rs 1,500 crore for mining, which means total project cost could well be in the region of Rs 7,500 crore. Only the mining company North American Coal of the US has a 10 per cent equity stake in the project which has a debt-equity ratio of 70:30. RIL, it is said, can pitch in the balance equity and need to consider roping in EPC and O & M partners only in future.

For implementing the project a special purpose vehicle in the name of Jayamkondam Power Company has been registered and it is learnt that B H Kothari, son-in-law of Dhirubai Ambani, has become a director of the company.Meanwhile, RIL has pre-qualified for the Rs 300-crore 100 km four-lane highway from Chengalpattu-Tindivanam proposed by the National Highway Authority of India. The construction document for this and similar 100 Km projects to link Jaipur with Krishnagiri andHosur-Bangalore has been cleared by the Committee of Secretaries and NHAI is expected to seek offers from the prequalifiers for these projects by the first week of January.

RIL is also pushing for big investments in the horticulture area in Tamil Nadu and is slated to have further discussions for identifying suitable land for this purpose. The company is in the race for the Cuddalore port having pre-qualified. Others in the race are L & T, Zoom Developers of Mumbai, Durgeshwari Enterprises of Tamil Nadu and the Malaysian firm Midland Square, it is learnt.