The response for Giral Lignite Power has been lukewarm so far as use of poor quality lignite has left Unit 1 unusable
Rajasthan government's ambitious experiment to run country's first lignite-powered power plant has gone bust and efforts are being initiated to privatise the Giral Lignite Power plant which has a capacity of 250 megawatt.
At stake are loans worth Rs 468 crore from Power Finance Corporation, with the government planning to transfer the debt from the books of the state power generation entity to the subsidiary if the sale becomes a success.
State government's Rajasthan Rajya Vidyut Utpadan Nigam has just floated a global tender for divesting its entire shareholding in its subsidiary in Giral Lignite Power Ltd, which runs a 250 MW lignite-fuelled power plant in Barmer district.
The response, so far, has been lukewarm, from the private sector, apparently because of the fundamental weakness in the plant and its working, including basic defects in the plant that can no longer handle poor quality high sulphur content lignite, which itself is considered to be a poor cousin of coal, sources said.
"We have no such plans to bid for the Rajasthan government's Giral plant," said Hermant Kanoria, chairman of Srei Infrastructure Finance, which has interest in picking up stressed assets, said.
Sources said using poor quality lignite was a bad business decision and it would be difficult to continue to run the plant using high sulphur content fuel which has damaged the plants, rendering Unit 1 unusable unless investments are made in refurbishing the plant.
"A major reason for the Plant Load Factor being low is the high sulphur content in the lignite being used at present. The same could be taken care of in case lignite having lower sulphur content from alternative mines could be sourced," merchant banker SBI Caps has disclosed in the bid document.
Built at a cost of Rs 1,865 crore and suffering regular losses, with only one unit of 125 MW operating, Giral has a negative reserve of Rs 466.50 crore as on March end.
Failure to successfully divest the two plants would put at risk Rs 468 crore worth of outstanding loans taken from Power Finance Corp.
Giral Lignite Power is country's first lignite-based power plant in Rajasthan and is in fact first power plant in the world in operation, atleast partially, using lignite having sulphur content in the range of 6%. But as the technology was not fully proven and matured for smooth and efficient operation, it faced design problems in its main equipment.
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