New heights

New Delhi, Nov. 21: The Oil and Natural Gas Corporation (ONGC) will sign a pact with the Tripura government to set up a 750-mw combined cycle gas-fired power plant in Pallatana at an investment of Rs 2,500 crore. The deal, which is the largest investment in Tripura so far, will be signed by the end of this month.

Given the rather sensitive security situation of the state, the petroleum ministry wants the Tripura government to pick up a stake in the power project. The ministry feels Tripura?s participation will ensure greater security.

In the past, there had been instances when state governments in the Northeast have dragged their feet in helping ONGC in tricky local situations and the navaratna company had to suffer huge losses.

Petroleum secretary S.C. Tripathi said the financial structure for the project is being worked out in such a way that the Tripura government does not have to take a major share of the financial burden. However, no assistance is expected from the central government.

According to Fichtner Consulting Engineers Ltd, technical consultants to the project, the cost of producing power from the plant will be Rs 3.27 crore per mw. The plant could be later expanded to produce 1000 mw of power.

Although ONGC?s proven gas reserves in Tripura are sufficient to support a 750-mw power plant, reports prepared by senior officials suggest the plant?s capacity could be increased to 1000 mw as more gas is expected from unexplored blocks.

Since the Tripura government has indicated that the state can absorb only 100 mw of electricity in three years, the surplus power will have to be wheeled out.

ONGC has a separate deal with Power Trading Corporation for selling surplus power. The upstream oil company is also planning to ink MoUs with the state governments of Rajasthan, Assam, Punjab and UP for selling surplus power, which will be fed into the national grid.

ONGC?s proven gas reserves in Tripura have been estimated at around 7 million standard cubic metres per day. Since the gas cannot be evacuated easily, it will be easier to evacuate the power through the national grid.

With private companies unwilling to invest in strife-torn Tripura, the power plant is expected to be funded mainly by ONGC. IL&FS, the financial adviser to the project, has kept an option for 100 per cent ownership by ONGC.

The petroleum ministry had even invited the Tatas to invest in the project as they are planning to set up a power plant in Bangladesh. But the company did not respond positively.

ONGC may partner with IL&FS for evacuating the power, which will help mitigate the risk for ONGC.

IL&FS has prepared four options, one of which is a private-public sector partnership with ONGC investing 26 per cent in the plant. It has also proposed a separate 100 per cent private power evacuation company.