CIT to introduce second-user power plants
With the Exim policy relaxing the norms for relocating second-user plants, the UK-based power consultant CIT Ltd is planning to bring power plants with a residual life of around 20 years to India from the US and Europe.
CIT managing director Kapil Dudakia told Business Standard that the company had initiated talks with firms in Andhra Pradesh and Karnataka to sell second-user plants. He said that they could supply plants with a capacity of between 5 MW and 600 MW.
A residual life of around 20 years will translate into around 100,000 hours of usage time. The average returns on power projects in India come to around 10-15 per cent per year. This can be increased to as much as 30 per cent by second-user systems.
The company can relocate a plant in 18 months while a normal power station takes more than three years to commission.
The response for such projects has been encouraging in India. Already 6-8 orders in the 10-60 mw range are in the pipeline and a similar number of projects are expected to come through soon.
The company is at present targeting the captive power segment. With the captive power sector gaining momentum, players in the business of selling second-user plants see huge opportunities.
Captive power facilities now constitute nearly 27 per cent of the installed capacity of 104,000 mw. Also, the Electricity Bill, 2001, which provides for players with captive plants to sell excess power, is expected to be enacted soon. This will boost the use of captive plants. CIT's current portfolio includes 1.7 mw oil/gas-fired sets to large oil-fired sets of 660 mw.
However, even after delicensing, import of second-user plants will be subject to the Foreign Investment Promotion Board’s clearance. Also, as per the Exim policy, the depreciated value of such plants should be more than Rs 50 crore.
On the issue of dumping of plants and technology, Dudakia said that dumping issues hold good in sectors where cycle of development is very fast. In the power sector, technology used remain unchanged for a long time. Thus, the apprehension of dumping do not hold good.
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