Reliance Power and Adani Power may have signed MoUs for power projects in the neighbouring Bangladesh, but analysts say the viability of the projects would depend on the final pricing structure for the power produced.
While Reliance Power is planning to set up a 3,000MW gas-based plant, Adani Power plans for a 1,600MW coal-based thermal plant, said Sambitosh Mohapatra, a power analyst with PricewaterhouseCoopers India. “We need to understand what scheme they will go in. There is a ready market, and if it is on a cost-plus basis and regulatory approved, and not via the bidding route, it should be easily bankable”, he said.
Cost-plus pricing refers to a selling price set by the company after it adds a profit margin to its production cost. Under bidding process, the price is market-discovered i.e, the project is awarded to the company with the lowest bid.
However, new questions may crop up, he said. “We need to understand how the Bangladeshis will give (the projects) just to a Reliance or an Adani, and not open it up for bidding,” he said.
Reliance Power, which is likely to get natural gas at $10 per million British thermal units(mBtu), is expected to generate power at 10 cents(Rs 6) per unit. It is unlikely to supply any power to India, said a spokesperson.
A source close to Adani Power said it was “certain” that some of the power generated would be routed to India. The company did not respond to a detailed query emailed by HT.
While the first phase of Reliance’s plant, a 1,500MW unit, is likely to come up in the Meghnaghat area, the Adani project could be set up in the Maheshkhali Island. Reliance is likely to use equipment it had procured for its proposed 2,400MW plant at Samalkot in Andhra Pradesh.