Swan wants $25m refund for Pipavav stake

Vol 15, PW 15 (09 Feb 12) Midstream & Downstream

After months of public pressure, Mumbai-based Swan Energy has put up its hands in surrender and announced its exit from the GSPC Pipavav Power Company, where it was awarded a controversial 49% stake by the BJP-ruled Gujarat government two years ago.

Swan wrote to GSPC managing director Tapan Ray in January making its intention clear. “Yes we have written to GSPC and the Gujarat government,” confirms Swan.

“We have asked GSPC to refund the Rs125cr ($25.50m) we gave as part-payment for our stake. This (proposed 2100-MW gas-fired) Pipavav power project is heading nowhere and we’ve unnecessarily been dragged into controversy.

” Swan’s latest move might well be a face-saving measure, as a verdict is expected soon in a Gujarat High Court case filed by Congress leader Shaktisinh Gohil against Swan, GSPC and the Gujarat government alleging corruption in the sale of the 49% stake in state-owned GPPC. Gohil also alleged GSPC and the Gujarat government undervalued their own shares, sold at Rs37 ($0.75) each, causing a loss to the exchequer of over Rs2000cr ($408m).

GSPC currently holds 34% of the under-construction Pipavav power station, located in Gujarat’s western Amreli district, while the remaining 17% is with Gujarat Power Corporation. In July last year Gujarat energy minister Saurabh Patel criticised state-owned EPC contractor Bharat Heavy Electricals (BHEL) for delaying the 700-MW Phase-I of the project, which is now almost two years behind schedule.

“BHEL has yet to deliver the ‘steam turbine’ for a 350-MW unit needed for Pipavav Phase-I,” adds a GSPC source. Worse, the ‘box up process’ of the turbine generator, the ‘seawater intake’ and ‘outfall’ systems and the ‘pedestal bearing’ are all still under construction and it could be several more months before this work is completed.