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Tatas vow help to Maithon

Mumbai, Nov. 29: Tata Power Company will help Damodar Valley Corporation to set up a pit head coal-based 1000 mw project in Maithon, Jharkand.

The company’s board gave an in-principle approval to sign a memorandum of understanding with Damodar Valley Corporation.

Tata Power's arch rival, Reliance Energy (formerly BSES), had exited from this project about four months ago since it wanted to concentrate on gas-based projects.

Reliance Energy, the erstwhile partner in the Maithon Power Project, decided to concentrate on gas-based power projects after it discovered huge reserves of gas in the Krishna Godavari basin in Andhra Pradesh.

The Maithon project will need a minimum investment of Rs 3,500 crore.

Initially, when the blue print of the project was drawn it was proposed to be set up on a debt equity ratio of 70:30.

Tata Power's board of directors, at the meeting held on Friday, gave its clearance for the proposed MoU subject to satisfactory due diligence on the project.

Industry sources say the due diligence is a formality as the group has several interests in Jharkand. Tata Power expects to achieve financial closure within the next 9 to 10 months.

The Maithon project has been planned in two phases. Each phase would comprise 500 mw each, within a space of four to five years, which means by 2008 and 2009.

Analysts feel the project will allow the company to derive immense synergies as it hopes to transmit power generated from the Maithon project through the Tala transmission line to states like Delhi, Haryana etc.

The Tala transmission line is a joint venture that Tata Power and the government-owned Power Grid Corporation have set up entailing an investment of Rs 1,200 crore.

Tata Power Company has a generating capacity of 1,794 mw in its licensed area. The company has a generating capacity of 300 mw at Jojobera, 85 mw at Belgaum and 75 mw at Wadi, making them the largest generator of power in the private sector.

Shares of Tata Power ended at Rs 268.40, up 1.63 per cent from the previous close of Rs 264.10, in the Bombay Stock Exchange on Friday.

After BSES opted out of the Maithon project, Damodar Valley Corporation indicated its own plan to implement the Maithon Right Bank Thermal Power project.

DVC which is under the Union power ministry, said that it was open to any other offer for implementing the 1000-MW project located in Jharkhand.

However, if such an offer is not forthcoming, DVC would implement the project on its own, the company had said. Tata Power’s decision to join may finally see the ambitous power project coming to fruition.

The mega power project will enjoy certain tax benefits.

DVC has already made payments for acquiring the land. The process of notifying has begun and the corporation has already made some payments.

The project needs a total of 1,062.365 acres of which 445.9 acres is forest land. The foundation stone for the project was laid in January 2000.

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