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Bangalore , Nov. 10

STATES have approached the Centre for a dilution in the mega power status norms in a bid to allow projects promoted by them get tax exemptions.

Almost all the southern States including Karnataka have appealed to the Centre for reduction in the capacity requirements to 500 MW. Currently, the guidelines of the Ministry of Power permit only 1,000 MW projects to be treated as mega power projects. Mega power status allows projects to avail themselves of tax exemptions.

Speaking to reporters here today, Mr K. Jothiramalingam, Managing Director of Karnataka Power Corporation Ltd (KPCL), said the Ministry of Power and the Ministry of Finance were processing the appeals of the States.

The revision in the norms would allow the proposed 500-MW Bellary thermal power station to be categorised as a mega power project. As a result, the project tariffs could be brought below Rs 2 per unit.

He was speaking after awarding the engineering, procurement and construction (EPC) contract to the state-owned Bharat Heavy Electricals Ltd.

The Letter of Indent (LOI) for the contract was given to BHEL today and firm work order for the project would be handed over by December with a deadline of 36 months for completion. The project cost has been estimated at Rs 2,100 crore. Mr Jothiramalingam, however, added that the costs were expected to come down further due to changes in the soft costs, especially interest during construction. As a result, the completion cost for the project was estimated to drop to less than Rs 2,000 crore, he added.

Referring to the Rs 4,200-crore, 1,400 MW Bidadi power project, he said KPCL had short-listed a clutch of companies as engineering, procurement and construction contractors. The companies included Siemens, Sumitomo, General Electric, Alstom and a consortium comprising of Marubeni and Mitsubishi Heavy Engineering. The EPC contract for the project would be finalised by February, he added.

However, for the gas supply bids, the request for proposals are expected to be floated within the next few days and would be finalised before the end of the year, he added. The qualified bidders for the project include Gas Authority of India Ltd, Reliance Industries, Bharat Petroleum Corporation Ltd along with Petronet and Petronas of Malaysia. Reliance Industries' offer is for supply for natural gas. The rest for the bids are for supply of regassified natural gas.

The gas requirement for Bidadi, at 85 per cent plant load factor, is estimated to be in the region of about 1.4 million tonne per annum.

Asked whether KPCL would prefer to wait for the National Thermal Power Corporation (NTPC) to finalise the contract for Gandhar and Kawas before the fuel supply bids are opened, Mr Jothiramalingam said, "Why should we wait? They are probably waiting for our fuel supply tariffs to be finalised before opening their bids."

He, however, added that KPCL hoped to have fuel prices that would not allow power tariffs to be as competitive as thermal power projects, inclusive of both fixed and variable costs.

He said both these projects would be funded completely out of KPCL's balance sheet. Initially, both these projects were proposed to be taken up as joint ventures, though KPCL was unable to finalise partners for the projects, he added.

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