Calcutta, July 20: National Thermal Power Corporation (NTPC) has set the ball rolling for the 500-mw power plant to be set up at Farakka in Bengal.

NTPC has worked out the financing model for the project and has decided to invest Rs 600 crore in equity. The remaining Rs 1,400 crore will be borrowed to finance the Rs 2,000-crore project.

The public sector unit has already approached different ministries for clearances.

The new plant will be an extension of the existing 1600-mw unit at Farakka. Bengal will consume 34 per cent of the total power generated at the new unit.

Under the Farakka stage I, there are three units of 200 mw each. Farakka stage II has two 500-mw units.

Water and coal linkages have been the deciding factor for the unit. NTPC has received in-principle approval from the Central Water Commission.

The company has applied for a captive coal mine block at Brahmani. The Union coal ministry is studying the proposal.

Farakka stage III forms a part of NTPC’s expansion programme in the Eleventh Plan Period. The corporation hopes to start construction in 2007 and complete it by 2011. NTPC will add 17,333 mw in the Eleventh Plan Period.

At present, NTPC produces 23749 mw, of which thermal power generation contributes 19480 mw. Another 3955 mw is produced from gas/liquid linkages and the rest 314 mw is produced through a joint venture with Steel Authority of India Limited.

In 2005-06, NTPC has earmarked Rs 8,500 crore as capital expenditure. Of this, NTPC will provide Rs 2,720 crore from internal accruals. The total borrowing will be Rs 5,830 crore.

Around Rs 4,500 crore will be raised in the country through private placement of NTPC bonds. The bonds will be issued in the third and fourth quarter of this financial year. The remaining Rs 1,300 crore will be raised through issue of eurobonds. The schedule has not yet been decided.