The Indian Oil Corporation (IOC) has sought permission to expand the capacity of its proposed 500MW vacuum residue power project in Savli to 1,000 mw. Further, in view of this, the oil behemoth has also sought that the project be granted the status of a mega project and be accorded all the customs and import duty concessions which this would entitle it to.

Highly-placed sources in the Gujarat government revealed that the navratna is awaiting the requisite clearance from the Centre before doubling the capacity of the project.

IOC’s move to expand the capacity of the Savli power project is in line with its move to expand the capacity of its Koyali refinery from the existing 12.5 million tones to 15.5 million tones as there would be enough vacuum residue to generate even 1,000 mw of power.    

In the meantime, it is believed that the Rajasthan government has evinced interest in buying as much as 500 mw of power from the project as and when it goes in for doubling its capacity, sources said.

However, IOC’s keenness to initiate work on the Savli project is being hampered by delay in approvals and clearances to be accorded by the Gujarat Pollution Control Board (GPCB).

"The vexed issue at present is that IOC is still vacillating over which technology to go in for the power project, revealed a source closely involved with the project.

It may be mentioned that IOC has been debating between opting for the cheaper conventional boiler technology with FGD (flue gas desulphurization) and the more expensive IGCC (integrated gassification combined cycle) technology. 

"The problem with the latter is that it is not yet a proven technology in India and moreover would push up the cost of the project by at least 25 to 30 percent", revealed a state government official.

In view of this, IOC has expressed its willingness to go in for the conventional boiler technology. And it is here that the issue is stuck since the GPCB has raised serious doubts about the efficacy of this technology in terms of preserving the ecology.

"Vadodara and its surrounding areas are already a very fragile ecological area which will be badly affected by the sulphur spewed by power stations built on this technology," admitted as senior official of the GPCB.

IOC, on its part, is sticking to the line that the sulphur content of the flue gases emitted will not be strong enough to pollute the environment and will be well within the permissible limit. Instead, it is accusing the GPCB of applying "pollution norms more stringent than those existing in Europe".

The Gujarat government, meanwhile, has made it amply clear that it has no objection to IOC choosing any of the two technologies, provided it gets the cheapest power possible as a consumer.

"Ultimately, it is the developer who has to decide on the technology and seek the final consent of the state pollution board", said a senior bureaucrat of the energy department. 

IOC is in the process of structuring the capital of the project.

Since the inception of the project IOC has a 26 percent stake in the Savli project while L&T and Mitsubishi has a 24 percent stake each while the Gujarat government, in accordance with its policy of picking up a stake in start-ups, has an 11 percent stake through the Gujarat Power Corporation Ltd., Sources said that currently finishing touches are being given to the share holders agreement.