CESC strikes deal to supply 150 MW from troubled Chandrapur project


At a time when power distribution companies are shying away from signing power purchase agreements (PPAs), RP Sanjiv Goenka Group company, CESC Ltd, has been able to strike a deal to supply 150 mw to a private power distribution company, from its 2×300 mw Chandrapur project in Maharashtra, implemented by Dhariwal Infrastructure, a 100% CESC subsidiary.  The deal will bring in the much required revenue to the Chandrapur project, which  fell into troubled waters after CESC’s acquisition. The project was facing a number of problems relating to fuel supply agreement for absence of valid PPAs.

CESC after acquiring 51% stake in Dhariwal, a Manickchand Group Company, in 2008, discovered that an existing fuel supply agreement (FSA) was not a part of an acquisition and that an existing FSA did not get automatically transferred to a new stake holder following an acquisition. While there was no clear cut policy on this issue, CESC  could not take advantage of the existing FSA and had to wait long for signing a new FSA with South Eastern Coalfields Ltd (SECL) subject to the PPAs it has signed.
RP Sanjiv Goenka Group chairman Sanjiv Goenka said; “the rules of the game changed after we made the acquisition and we had to come across a new experiences”.  Geonka took over 51% stake in Dhariwal for Rs 200 crore and planned further Rs 1,000 crore investment. Although the project started commercial operation in 2014 it could not utilise its capacity for lack of PPAs.

However, the new agreements would enable Dhariwal to utilise most of its capacity bringing fresh revenues to the company.
Although Goenka did not want to divulge the name of the distribution company with which it would sign the power supply agreement, he said negotiations were going on for sale of 150 mw on a “cost plus guarantee return basis” and he hoped to close the negotiation soon.

There were policy bottlenecks for which the Dhariwal project did not get coal and therefore supplies of power were halted despite unit one of 300mw starting commercial operation in February 2014. “We are glad that the long standing problem of signing fuel supply agreement has finally been resolved and the ministry of coal has allowed Dhariwal to sign fuel supply agreement with SECL” Goenka said adding that Dhariwal from March 2016 has started receiving coal from SECL.

Dhariwal’s unit two of 300 mw has also started supplying power to Tamil Nadu Generation & Distribution Company. The company has also signed another agreement to supply power from its Dhariwal unit to Noida Power Company Ltd, which witnesses peak demand of 300mw during May and June catering to a population of 7 lakh spanning over 335 sq kms. Power demand in this area is growing at over 20%, Goenka said.