Maharashtra's state power generation utility Mahagenco is looking for strategic partners to set up two critical power plants at Dhopave in Konkan and Dhondai in Dhule district. Last week, Mahagenco called for an expression of interest (EoI) for the 3200 mw Dhopave and 1600 mw Dhondai plants. Mahagenco expects private companies as well as a public sector giant like NTPC to show interest in setting up these plants.
For the first time in Maharashtra, a public sector generation company is considering a joint venture(JV) model for generating plants. Financial crunch and procedural delays involved in getting fully state-owned plants commissioned have prompted Mahagenco to look at the JV option.
The official, who requested anonymity, said the decision marked a major change in Mahagenco’s policy. “Preference for the JV model is a major departure from the age-old policy which said that super critical generating stations have to be set up only by Mahagenco. The shift in policy also represents the changes that have taken place in the power sector in the last decade or so,” the official said.
Mahagenco officials said the two projects could mark the beginning of a prolonged phase of JV projects in Maharashtra’s generation sector. “Between 2012 and 2017, Mahagenco has lined up Dhopave and Dhondai plants for the JV model. There may not be a third new project during this phase that Mahagenco would take up on its own,” the official said.
In the JV that Mahagenco proposes to form with strategic partners, it will hold a maximum 26% stake, that will largely be in the form of coal and land. The union coal ministry has already allocated coal blocks in Orissa to Mahagenco. Both Dhopave and Dhondai are going to be coal-based plants. The JV model has come up after Mahagenco considered three other options—holding 51% stake, executing the projects entirely on its own, or outsourcing the entire project to other companies.
“These options have their disadvantages. If Mahagenco held 51% stake, it will become a government company discouraging private participation. Setting up the plants on our own is not financially viable as it involves government of Maharashtra’s financial participation. Lastly, outsourcing the projects to other companies was also ruled out because Mahagenco won’t be in a position to leverage its association for the benefit of the state,” said another official.
The JV model with 26% stake to Mahagenco would ensure that the state gets 100% power generated at these plants as Mahagenco will be able to leverage supply of coal and land. When private or other public sector companies set up their plants in the state, Mahagenco gets written commitment from them to sell at least 50% power in Maharashtra.