577 MW of Solar Projects Approved For Mumbai By Maharashtra Cabinet

The Maharashtra state cabinet on September 8 cleared two solar power projects to be set up by Maharashtra State Power Generation Corporation ltd (Mahagenco) for supplying power to capital Mumbai. The two projects, of 187 Megawatt (MW) and 390 MW capacity respectively, are expected to be completed by 2023.

Impetus for the approval came from the offer of project financing for the projects from KFW-Bank, Germany, which has offered attractive terms for a loan, at an interest rate of 0.05 percent. While a loan of Rs 588.21 crores will be taken for the 187 MW project, Rs 1564.22 crores will be raised from the same source for the 390 MW project. Loan agreements and relevant approvals for the project are already in from the central government and state finance department. The state government hopes to repay the loans within a period of 12 years.

Similarly, the government has sanctioned the raising of Rs 158.29 crores and Rs 364.18 crores respectively for the two solar projects from domestic institutions and budgetary allocations.

The project will be set up on an Engineering-Procurement and Construction basis. State government and PSU contracts typically have a provision for O&M for a period of 3-5 years, though details on the plans here are not available yet.

For the state’s discom Mahagenco, the solar addition to the portfolio comes at a time when it has just 180 MW of solar in its 13602 MW portfolio. Dominated by thermal at a share of almost 75%. Add gas to that, and it will hit 80%, with the rest taken by Hydro. Mahagenco has made its share of efforts of course, but for various reasons, final project progress has been limited or slow.

The foreign funding also makes sense to attract quality bids, as discoms on their own rarely attract the same anymore, thanks to their patchy record on payments and other issues.