R-Power may slash Dadri project capacity, eyes new sites for plants

Anil Dhirubhai Ambani Group company Reliance Power (R-Power) may substantially scale down its 7,480 megawatt Dadri power project and instead set up two or more plants totaling 8000mw capacity at multiple locations.R-Power may not altogether abandon the Dadri project as was widely speculated, a person close to the development said. It had been reported that due to disputes over the land acquisition, the company may relocate its Dadri project.

Post the Supreme Court judgement, various state governments have evinced interest in R-Power’s gas-based power project. “Currently, we are examining all options, including Uttar Pradesh, Andhra Pradesh, Maharashtra and Gujarat, keeping in mind over 3.5 million shareholders’ interest,” R-Power spokesperson told.

Instead of the proposed 7,480 mw gas-based Dadri project (the largest plant in the world at a single site), R-Power is looking at multiple locations with relatively smaller capacities for strategic reasons, industry experts said. Both western and southern regions are facing an acute power shortage. Also there is no significant capacity addition in Andhra Pradesh, Gujarat and Maharastra. So tariff in a competitive bidding in these regions are expected to be high. These states have no coal reserves and they are on the East-West pipeline system, gas-fired projects are one of the most viable options.

As per officials in the power ministry, state governments of Maharashtra, Gujarat and AP are in discussion with R-Power to set up the Rs 30,000-crore project. R-Power will take a decision based on various fiscal incentives offered to it by the respective states, an official said. The company will take a decision about locations and plant size as per transportation economics, supply-demand scenario and fiscal incentives offered by these states. Persons privy to the development say that R-Power has land at Samalkot (in AP) and Shahpur (Maharashtra) with all necessary clearances. Gujarat has recently offered the company to set up its power plant there. Besides faster regulatory clearances, the Gujarat government has also assured land to the company for the project.

With an eye to expand the group’s 220 mw gas-based Samalkot plant, last week R-Power acquired gas-based power assets from Reliance Infrastructure (R-Infra), another Anil Ambani Group company. R-Power is already developing 4,000 mw (1,200 mw coal-based and 2,800 mw gas-based) power plants at Shahpur in Maharashtra.

R-Power is investing Rs 30,000 crore to create gas-based power generation capacity totalling 8,000 mw to utilise the 28 million standard cubic metres per day (mmscmd) gas it is expecting to get from Reliance Industries’ (RIL) KG basin. After prolonged legal battle over the gas between RIL and Reliance Natural Resources (an ADAG company), in early May the apex court had asked the companies to renegotiate the gas supply agreement in eight weeks time. RIL and RNRL, promoted by brothers Mukesh and Anil Ambani, respectively, are expected to sort out gas supply issues soon, persons close to the development said