Financial Daily from THE HINDU group of publications
Tuesday, Dec 10, 2002
Industry & Economy
Power crisis likely to worsen in Kerala
KOCHI, Dec. 9
KERALA'S power crisis is likely to worsen in the coming months with deficient monsoons having led to reduced water levels in the reservoirs of hydro-electric projects and thermal projects being forced to use less capacity or shut down operations.
During the year, both the south-west and the north-east monsoons eluded the State, as a result of which water levels in the reservoirs dropped significantly.
The water level in the major Idukki dam is currently around 30 per cent of its capacity, with which only about 670 million units (MU) can be generated.
If the monsoons had not failed, the reservoir would have enough water to generate 2,184 MU.
The sharp fall in the water level seems to have compelled the State electricity board to reduce daily generation from this project to 2-5 MU from 10-15 MU.
To make up the shortfall, the Government resorted to drawing more power from the Central grid and elsewhere, apart from enforcing a cyclical power cut daily during the peak hours.
In addition, unofficial power cuts are reportedly prevalent, especially in rural areas.
Power drawn from outside has reached 15-16 MU while the daily requirement ranges between 32 MU and 35 MU, industry sources said.
Simultaneously, to make things worse, the thermal power plants in the State are either operating far below capacity or have shut down operations.
The thermal power plant set up at the behest of the State Government in 1995 at nearby Pathalam has not been operating for over a year now.
The 165-MW plant set up at a cost of Rs 620 crore is left to idle; the maintenance alone now requires Rs 3 crore.
The Government was supplied 420 MU of power up to July 2001. On this account, towards fixed power price and fuel cost, it owes the company Rs 199.60 crore.
Non-payment of dues has compelled the BSES plant to shut down operations from October 2001, sources said.
No action has been initiated to take the dispute between KSEB and BSES to the Central Electricity Authority (CEA).
BSES has invested Rs 110 crore in the plant, while Kerala State Industrial Development Corporation (KSIDC) has invested Rs 17.48 crore.
The rest of the investment was made through borrowings from Canara Bank, Punjab National Bank, Andhra Bank, Vysya Bank, Indian Overseas Bank, Stanchart, IDFC and Power Finance Corporation.
According to company sources, the management had managed to get exemption from paying excise duty on fuel from the Central Government.
But the efforts to secure sales tax exemption from the State Government for the fuel (naphtha) are yet to receive a positive response. There are also rumours that the plant might be moved out of the State.
Meanwhile, the diesel power plants at nearby Brahmapuram and Kozhikode are also reportedly not being operated to full capacity for want of fuel and high cost of generation.
The entire power generated by NTPC's 350-MW Kayamkulam thermal plant is also being absorbed because of the high cost, official sources said.
The State Government does not seem to be in a position to fully absorb the power generated by the existing thermal plants here on the ground that the cost is higher.
Meanwhile, in a bid to reduce the cost of power by making a judicious thermal-hydel mix, the Government identified 95 small hydel projects in different parts of the State. But implementation of these projects is moving at snail's pace, industry sources said.
About five years ago, the Government signed PPAs with six companies for setting up thermal power plants with a combined capacity of 2,175 MW, while MoUs were signed with three for putting up naphtha-based power plants with 1,330 MW capacity.
However, all the projects still remain on paper. Some of the promoters have backed out while some are still in the fray in the hope that if an LNG terminal comes up here, they would be able to set up the plant with LNG as fuel.
The cash-strapped KSEB might find it difficult to take any of the projects; hence, the only way out of the crisis is to allow private participation, the sources said. At the same time, the board has to be revamped and restructured to bring down establishment cost. It is against this background that the Global Investors' Meet (GIM) is being held in the State in January.
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