Gujarat Gokul Power Limited, the legal entity of Gokul Group based out of Sidhpur is considering to set up a 80 MW power plant which would be a thermal power station using lignite. The project cost is estimated to be around RS 460 crore to come up in Surat near one of its ditrict Tadkeshwar.

Gokul Refoils and Solvent Limited, the flagship company of the Gokul Group would hold any equity of 74 per cent in the proposed plant and the rest 26 percent would be held by Gujarat Mineral Development Corporation (GMDC) as per an official communication.

Praveen Khandelwal, VP, Gokul Refoils said in an interview that the funding for the project would be done mainly via debt or equity in the ratio 70:30. The Gokul group would arrange a loan of RS 100-105 crores and the equity funding would be Rs 140 crore.

He also said that various financial institutions are being contacted and that the agreement would be made within this year end.

61 hectares of land has already been obtained for the development of this project. Out of the total production capacity, 55MW would be given to GMDC and Gokul Group in the ratio 20:35 and the Gujarat Urja Vikas Nigam Limited (GUVNL) would receive 25 MW and the rest to be supplied to other parties.

Cost savings would be one of the beneficial factors favouring the power plant. The communication also stated that the power rate would become Rs 3.40 per kwh versus the grid rate of RS 5.50 per kwh.

The power plant would receive an assured supply of raw materials like lignite and limestone from GMDC as the PSU is an equity holder in the project. The communication further stated that the shortage of domestic coal allocation would benefit the power plant as there are less chances of any new project coming up in the near future.

In the meantime, Gokul Group and GMDC have consented to ramp up the production capacity of the power plant to 135 MW from 80 MW.