Informist, Tuesday, Aug 10, 2021
By Sunil Raghu
AHMEDABAD – The prospects of Torrent Power Ltd having to return the land that houses its 362 MW power plant in Ahmedabad back to the state government have risen.
The company has sought a five-year waiver from a compliance requirement to install a flue gas desulphurisation unit at the power plant, sources aware of the development told Informist.
It is seeking the waiver in order to buy time to gauge whether Ahmedabad will win a planned bid to host the Olympics games in 2036, the sources told Informist.
Torrent Power has a power purchase pact with Gujarat Urja Vikas Nigam Ltd only till 2022, when the flue gas desulphurisation norm is expected to kick in.
Thus, the company wants to avoid significant capital expenditure and steep rise in cost of electricity given the likely limited remaining useful life of the plant, sources said.
The closure of Torrent Power's plant is certain if Ahmedabad wins the bid to host the Olympics, but a loss would mean that the company could look to make the necessary capital expenditure to increase the shelf life of the plant, the sources said.
Older power plants can continue to operate for 15-20 years after renovation and modernisation, and recover the cost through electricity charges over 25 years.
The Ahmedabad Municipal Corporation has already appointed consultants to advise the city on bidding for the games. The Gujarat state government has also been improving its sports infrastructure with an upcoming sports complex in Paldi besides the existing Sardar Patel Sports Enclave at Motera. Reports said another 6-bln-rupee sports complex in Naranpura was granted administrative approval by the Centre last week.
The coal-based thermal power plant accounts for 7.7% of Torrent Power's total 4,694 MW generation capacity. In Apr-Jun, the plant generated 1,266 mln units and accounted for 12.66% of 10,003 MW power generated by Torrent Power.
Torrent Power, once again in its 2020-21 (Apr-Mar) annual report, stated that the company may be required to phase out the plant in or before December 2022, mainly due to various town planning schemes and the fact that the plant is located in a densely populated area.
"The problem for Torrent Power is that it does not have enough land within the plant to set up a flue gas desulphurisation unit,” a source aware of the development said.
"The majority of land on which the plant sits is owned by the state government, which is keen on a sports complex as part of its plans for the 2036 Olympics bid,” the source said. “One cannot have international athletes competing right next to a thermal power plant."
The eight-decade old plant, according to regulatory filings, burns nearly 1.4 mln tn of coal per annum and generates about 1 mln tn of fly ash.
For Torrent Power, a decision on making the necessary capital expenditure hinges on the outcome of the city's Olympic dreams.
At 1401 IST, shares of Torrent Power were trading 0.5% lower at 454 rupees on the National Stock Exchange.
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Patricia Hou
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