June 30, 2013

State-owned iron ore miner NMDC has decided to rope in IL&FS Energy Development Company as joint venture partner for setting up a 500-MW thermal power plant in Uttar Pradesh with an estimated investment of Rs 2,000 crore. IL&FS will have 74 per cent stake in the venture and we will have the remaining.

NMDC in January invited expressions of interest (EoIs) from interested parties to be part of the power project, which would mark its foray into the power sector. Three companies, including IL&FS Energy and Jindal Power, had evinced interest to be a JV partner of NMDC for the power plant. After initial screening, Jindal Power and IL&FS Energy were found to be eligible on technical and financial criteria.

The power to be generated from the plant would be used for plugging the demand-supply gap of the state. The balance would be transmitted to meet the need of NMDC’s upcoming three million tonnes per annum (MTPA) steel plant at Nagarnar in Chhattisgarh.

NMDC in the EoIs had offered a minimum of 49 per cent stake and a maximum of up to 74 per cent stake in the project to the strategic partner. The company decided to offer a majority stake to IL&FS Energy.

IL&FS would arrange coal for the power plant either through purchase, auction or long-term fuel supply agreement. NMDC may also make coal available for the plant from the Shahpur East and Shahpur West blocks in Madhya Pradesh at the prevailing price.