China Light and Power India has finally got the technical approval from the Central Electricity Authority for its 1,200 MW gas based power plant in Gujarat. The project that is expected to cost INR 6,000 crore involves expansion of its existing Bharuch plant.

The expansion has been held up due to unavailability of natural gas as fuel. The Central Electricity Authority appraised the project for domestic gas allotment and it might get a fuel allocation in the 12th five year plan gas starting 2012.

Mr Naveen Munjal director business development of CLP Power India said that "As far as the readiness is concerned, we think we will one of the first few to get gas." Mr Munjal said that "The prices of liquefied natural gas are linked to crude oil prices. The tariffs currently prevailing in the Indian Power Sector cannot sustain usage of only LNG as a fuel."

Currently the spot prices are at approximately USD 15 a million British thermal unit, and going by this the variable cost itself will be close to INR 4.50 a unit. With fixed charges and transmission charges the total cost per unit will be well over INR 6 per unit.

He said that "There is no point in building a project and not using it to generate power it won’t even receive the shareholders and lenders’ approval."

CLP has already acquired land and environmental approval for the project. Hong Kong headquartered CLP entered the Indian market in 2002. It currently has an installed capacity of 900 megawatts and around 1,600 megawatts under construction including those from 10 wind power projects. It also plans to invest in projects accounting to 10,000 megawatts by 2015.

The company plans to achieve this feat by bidding for and winning ultra mega power projects two of which might seek bids this year. Even as the company plans to look mainly as case 2 power projects where government assures them of land, fuel and approvals, it is also looking at case 1 projects where no such assurances are available.

(Sourced from Business standard)