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Tata Ultra Mega
Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number 25797
Company nameCoastal Gujarat Power Limited
Country
India
Sector1Coal - Thermal Power Generation
Environmental categoryA
Department
StatusActive
Date SPI disclosedNovember 27, 2007
Projected board dateMarch 27, 2008
Previous EventsInvested: December 4, 2008
Signed: April 24, 2008
Approved: April 8, 2008
View Environmental & Social Review Summary (ESRS), click here
click here
  Overview     Sponsor/Cost/Location     Development Impact     Contacts     Attachments  

Project description
Coastal Gujarat Power Limited (CGPL or the company) will build, own and operate a 4,000MW (5 units of 800 MW each) ‘ultra mega’ imported coal and supercritical technology based power plant at the port city of Mundra in the state of Gujarat in India. The project will be the first 800 MW unit size supercritical technology thermal power plant in India and will likely be the most energy efficient coal based thermal power plant in the country. The project, awarded by India’s Ministry of Power through tariff based competitive bidding, is being sponsored by Tata Power Company Limited (Tata Power or the sponsor). It will sell its generation to the utilities of five different states (the procurers) in the power starved regions of western and northern India through a long term 25 year take-or-pay Power Purchase Agreement (PPA). The project will cost about $4.14 billion and will sell power at 25 year levelised tariff of INR2.26 per kWh which is competitive compared to current prices of bulk power in India. The project will source imported coal from mines of Indonesia and other countries and will use the Mundra port facilities (operated by the Adani group of Gujarat) for the project. The main plant equipment is being supplied by Doosan (supercritical boilers) and Toshiba (steam turbine generators). The project is the first private sector power project in India to be based on the energy efficient supercritical technology. The use of this technology in this plant will help reduce the average Green House Gases (GHG) emissions of Indian power plants per unit of electricity generated in the country. Based on the new technology and other measures being taken by the company, the project will meet the IFC social and environmental Performance Standards. This is also IFC’s first financing of a supercritical plant anywhere in the world.

The project fits well with the Government of India’s (GoI’s) plans of attracting significant investments in the country’s power sector which is facing a huge demand supply gap. India is currently facing enormous demand supply gap of about 11% energy shortage and 14% peak power shortage. This gap is very severe in some states such as Maharashtra which suffer from acute deficit of about 19% energy shortage and 27% peak power shortage. The growing gap in the country could lead to significant impacts on industrial growth and corresponding economic development. It is expected that if India is to sustain its current level of GDP growth of 8 – 9% per annum, it would need to add about 160,000 MW in generation capacity in the next 10 years. The demand supply gap will also increase as more rural households (currently rural household electrification level of only about 44% in the country) are electrified under the accelerated rural electrification program being currently undertaken by the GoI. Therefore, there is an urgent need to achieve significant generation capacity addition in a short time frame which will help meet the rising electricity demand and lead to economic development of the country. It is expected that large projects of this kind will help reduce the demand supply gap and the economic impact of delays which are encountered by most infrastructure projects in the country. The project will sell power to the states of Gujarat, Rajasthan and Maharashtra in western India and Haryana and Punjab in northern India. All these states currently suffer from energy shortages ranging from 7% to 19% and peak power shortages of about 10% to 30%. The project will play an important role in reducing these gaps with cheap and reliable supply which will also help in improving access to electricity in the country.

- Abatement of GHG emissions:

The project uses supercritical coal technology, which has been approved by CDM-Executive Board as a “Clean Development Mechanism” for power projects in India. Due to the use of this technology and choice of unit sizes, the thermal efficiency of the project (LHV, gross) will be higher by about 70%, 30% and 20% as compared to the average thermal efficiency (LHV, gross) of coal based power plants in India, across the globe and OECD. Therefore, the project will result in reducing the average carbon emissions of India’s electricity generation system per unit of electricity supply.

IFC’s approach towards abatement of climate change impacts includes investment focus on:

- renewable energy including small and/or run of the river hydro, wind and biomass sources;
- transmission and distribution to reduce technical losses and improve energy efficiency;
- supercritical coal technology, ultra supercritical or subcritical coal technology with energy efficiency higher than existing national average of the sector;
- enhancing access to natural gas based energy including supporting infrastructure like LNG Terminals, and gas transmission and distribution grids;
- improved management of municipal solid waste and waste water systems; and
- leveraging Kyoto Mechanisms (Clean Development Mechanism), to enhance the attractiveness of less GHG intensive energy generation and delivery approaches.

Since the most technologically proven method of reducing GHG emissions is improving power plants efficiency, IFC is giving high priority to funding more efficient power projects which will reduce the carbon emissions intensity in the country and reduce the average overall environmental impact of the country’s power generation system. It is expected that India will continue to be dependent on coal to fulfill its power requirements due to limited availability and high pricing of gas, hydro and other renewable sources. Therefore, IFC is supporting thermal power projects which have better GHG and environmental performance than the average plants in India, given the country’s large needs for incremental electricity supply.

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