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MRPL: Getting a ‘power’ break - Views on News from Equitymaster
 
 
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  • Nov 28, 2000

    MRPL: Getting a ‘power’ break

    The Aditya Birla Group has announced a 450 MW (mega watt) green power project to be set up in Mangalore in Karnataka. The project is estimated to cost Rs 23 bn. Until now the group has generated power only for captive purposes for its aluminium and fertilizers business. Hence, it has significant experience in power generation per se. In effect, the Mangalore power project is the group’s first official foray in commercial power generation. The power generated by the aforesaid plant is proposed to be supplied to the state grid.

    The idea of a power plant at Mangalore carries two fold benefits for the Aditya Birla group. For one, the feedstock for the power plant will come from the group’s ailing refinery company, Mangalore Refinery and Petrochemicals Limited (MRPL). MRPL will supply the refinery residue i.e. broken tar to the power plant. This is likely to reduce the plant’s operating costs. For MRPL, it will mean an additional source of revenue to shore up its sagging bottomline. The deal is thus expected to be beneficial for both. However, how much the deal will benefit both MRPL and the power plant in real terms is still unclear.

    Secondly, Karnataka the state in which the power plant is slated to come up is severely power deficient. According to estimates, by 2006-2007 the energy deficit in the state is pegged at 3,272 MW.

    Though it does look like a win win situation for the group as of now, the feasibility of the project is still to be ascertained. Given the history of power projects financial closure in India, it is still early days yet for Karnataka’s populace to get their hopes up. However, if this project does goes through, it will be a double bonanza for this energy deficient state, as it will the second project after the Tata co-promoted Mangalore Power Project decided to set up a 1000 MW plant in the state.

    Well, we just hope other states were equally blessed. India does need many more power projects for its development.

     

     

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