The 1,320-megawatt (MW) Udangudi thermal power project, for which bids were floated on Sunday, marks the first major power project to be taken up by the All India Anna Dravida Munnetra Kazhagam (AIADMK) regime, nearly two years after the assumption of office.

As per the plans of the Tamil Nadu Generation and Distribution Corporation (Tangedco), the prospective executing agency, which has to carry out the project on EPC (engineering, procurement and construction) basis, should finance the debt component of the project, which would come to approximately 75 per cent of the total project cost of around Rs. 8,400 crore.

Contract for the project is expected to be awarded by September, officials say. Pointing out that 420 hectares have been acquired in Tuticorin district for the project, they add that there is enough land for putting up one more unit of 660 MW.

Referring to a project of similar capacity that was cleared in Rajasthan, an official says that the cost of the EPC component of the project will be around Rs. 5,700 crore. As a thumb rule, the cost per megawatt will eventually be Rs. 6 crore.

Originally conceived five years ago as a joint venture project between the erstwhile Tamil Nadu Electricity Board (TNEB) and the Bharat Heavy Electricals Limited (BHEL), the Udangudi project got stuck over a host of issues including coal linkage.

In February last year, Chief Minister Jayalalithaa announced the termination of the understanding with the BHEL and said the project would be taken up as a State-sector project. The Tangedco has bought the share of the BHEL by paying about Rs. 54 crore. In view of uncertainty over getting linkage for domestic coal, the State government has decided that imported coal be used essentially for the project.

Later this week, the Tangedco is also expected to float bids for another 1,320-MW project, called Ennore Special Economic Zone (SEZ) Thermal Power Project. As in the case of Udangudi, this will also be implemented, using imported coal. The proposed plant will come up on the site that was once used as an ash dyke for the North Chennai Thermal Power Station.

Besides, bids from two major power players, BHEL and Lanco Infratech, have been received for the 660-MW ETPS (Ennore Thermal Power Station) expansion project. The estimated total cost of the five units, totaling 3,300 MW, is around Rs. 21,000 crore.

Even as the Tangedco is banking on imported coal for its new projects, it has also applied for the allocation of a coal block from the Central authorities. A senior official says that the Tangedco has fulfilled all the norms laid down by the Centre.