IVRCL Assets set to start Chennai desalination unit

After a delay of almost a year, IVRCL Assets, a subsidiary of infrastructure major IVRCL Infrastructures & Projects Ltd, is set to commence commercial operations at its desalination plant in Chennai.

Believed to be the first ever commercial desalination in the country, the project is raising hopes for IVRCL in terms of creating a benchmark for other cities keen on replicating such projects. “We are ready with the projects. All the tests on the plant and quality of water have been completed. Some of the approvals that were pending too have come through,” E Sudhir Reddy, managing director, IVRCL told DNA Money.

The project was to go on stream in August 2009. However, due to some technical glitches during the execution and pendency of certain approvals, it faced time overrun of about a year.

“The authorities need to supply sea water to the project at a certain turbidity. There is dredging going on along the coast affecting the turbidity of the water. Once the local government keeps itself ready and provides us with the date of commercial operations, the plant will start pumping water,” Reddy said.

The company has invested about Rs 600 crore on the project and would supply about 100 million litres per day (mld) of water to the Chennai metro water board. With the price of Rs 48 per kilo litre, the project will rake in revenues of about Rs 48 lakh per day or Rs 170 crore in the first year of operations. It estimated that the demand in Chennai for water is at about 900 million litres per day and the supply is at about 660 mld through the conventional channels. The project is expected to reduce the demand-supply gap.

To be operated on a build, own, operate and transfer (BOOT) basis, IVRCL would manage the project for 25 years. The project has been executed through a joint venture with Befasa of Spain and IVRCL has 75% stake in the JV. While about Rs 240 crore is equity, balance is raised through debt. In addition to contributing to the equity, the Spanish partner has also brought in the technology to purify the sea water and convert it into potable water.  The company is pinning hopes on showcasing the project to other cities on the sea coast for them set up desalinated water plants.

“We see potential in cities such as Mumbai and Vizag. We have understood the problems in handling the project and the technology required for taking up such projects. We will definitely have the edge in the market,” Reddy said.