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High tariff power projects removed from revised FRP

C. Shivkumar

The FRP is prepared in consultation with the World Bank, which has been consistent in recommending that low tariff stations be given priority so that the financial burden on the utilities and eventually the consumer is minimal.

Bangalore , Aug. 1

THE revised financial restructuring plan (FRP) for Karnataka's power sector has removed all the high tariff projects from its list, including liquid fuelled projects, after their contract period.

Sources said here that the revised FRP has instead included three projects of the State-owned utility, Karnataka Power Corporation Ltd (KPCL). These include the eight units of 210 MW at Raichur Thermal Power Station (RTPS). This addition would take up RTPS's capacity to 1,680 MW.

Further firm additions include the 1,400-MW Bidadi gas station, the 500-MW Bellary thermal station and the 290-MW Alamatti hydel power station and the 320-MW Mahadayi hydel project.

The central generating stations and the independent power projects added to the FRP list include a 500 MW share from the 2,000 MW Koodankulam nuclear power station, 108 MW out of the Kaiga expansion, 396 MW from Talcher plant of NTPC, 100 MW from Neyveli , 87 MW from Ramagundam, the 500 MW Jindal Extension at Tornagallu, the 1,015 MW Nagarjuna Thermal power at Mangalore and the 350 MW Bijapur thermal Power project .

The FRP is prepared in consultation with the World Bank, which has been consistent in recommending that low tariff stations be given priority so that the financial burden on the utilities and eventually the consumer is minimal.

The sources said that all these additions were expected to push up the State's generating capacity to 9,961 MW. Yet Karnataka was still expected to suffer a peaking deficit of at least 76 MW by the 11th Plan-end assuming an unrestricted peaking demand of 8,301 MW. This estimate has been arrived after factoring in a transmission and distribution loss reduction of 1.2 per cent per annum. The sources said this figure had been arrived with the assistance of the consultants employed by the Karnataka Power Transmission Corporation Ltd (KPTCL). The load forecast studies done by the consultant are actually lower than the estimates made in the 16th annual power survey of the Central Electricity Authority (CEA).

The CEA had estimated the peaking demand by 2011-12 at 10,740 MW. The peaking deficit was, therefore, likely to be much higher on the basis of the CEA's load forecast.

But sources said that all the liquid fuelled stations would not be given any extension beyond the contractual period. One of the major reasons for this was that liquid fuelled stations are treated as high tariff stations.

Currently, the tariff from the liquid fuelled stations, fired on naphtha is close to Rs 5 a unit in view of the high fuel prices. Sources said that extending the PPA would bring down the tariff by about 10 per cent, on the fixed cost side at best.

However, these tariffs would not still be substantially higher than the first year tariff of the planned thermal projects inclusive of the flue gas desulphurisation plants to restrict emissions.

First year tariff for coal projects are estimated to be in the range of Rs 2.35 and Rs 2.60 a unit.

Besides, if the liquid fuelled stations were taken off, the financial burden on the utilities would also proportionately reduce by way of a reduced power purchase costs. The PPA of the largest liquid fuelled station in the State, Tanir Bhavi Power Company Ltd, is expected to expire by the end of 2008.

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