NEW DELHI: State-owned NMDC will set up a Rs 3,000 crore thermal power plant with IL&FS Energy Development Company ltd (IEDCL) at Gonda, the Parliamentary constituency of Steel Minister Beni Prasad Verma.
NMDC Power, a subsidiary of iron ore miner NMDC, will initially hold 48 per cent stake in the venture for setting up the 500 MW plant, while the remainder will be with IEDCL, a subsidiary of IL&FS.
"Subsequently, however, NMDC would dilute its stake in the venture to 26 per cent, while IEDCL would have the rest 74 per cent stake," NMDC acting Chairman C S Verma said at the MoU signing ceremony here today.
Verma said, however, that the land for the proposed project has been identified, not acquired and the power plant would go on stream in 2-2.5 years for the date of financial closure that is 4-5 months away.
The project would be funded in a 2:1 debt-equity ratio. Verma said NMDC would gradually pare down its stake to 26 per cent, but would never exit from the project.
Justifying the move to set up the plant at Gonda, Verma said the decision took into account the land and water availability as well as the state of the market.
"We have to see where we are getting land. We have to see water availability. We have to see other amenities. We have to look at the cost of production. We have to see which state is power deficit," Verma said, replying to a query on the rationale of putting up the plant at Gonda and not at pit-head.
He added: "Uttar Pradesh is a power deficit state. There is a cost of transmission also. I can assure that we have done all the analysis and the cost of transmission is more than the cost of coal transportation also. We should get land also and in that case, all power projects would have come at the pit-heads."
The Steel Minister also justified the setting up of the plant the location, saying: "Establishment of power plant at Gonda will encourage potential agro-based industries and help in ensuring better living and industrial growth in the region."
Power Minister Jyotiraditya Scindia, who was also present on the occasion said: "The proposed partnership between NMDC Power and IL&FS would provide power to an area that has so far seen limited electrical connectivity."
The Steel Ministry has been recently pulled up by official auditor CAG for spending a large chunk of CSR budget of PSUs in three Uttar Pradesh districts including Gonda and Barabanki, the Minister's birth place.