The Hindu Business Line : Reliance urges NTPC Kayamkulam plant relocation to Kakinada

IN a bid to win a large customer base, Reliance Industries Ltd (RIL) has recently written to the Power Ministry seeking relocation of National Thermal Power Corporation's (NTPC) proposed 1950-MW capacity addition at Kayamkulam in Kerala to Kakinada in Andhra Pradesh.

This way, NTPC could use Reliance's natural gas find in the Krishna Godavari basin to fuel the proposed power plant without incurring any transportation cost to deliver the gas to the power plant.

Reliance has made a gas discovery in the KGbasin that can fuel 10,000 MW of power generation capacity for 20 years or 15,000 MW for 15 years.

In response to Reliance's proposal, the Power Ministry requisitioned the services of its technical body, the Central Electricity Authority (CEA), to study the demand profile and viability of capacity addition at Kakinada. The CEA has reported back to the Ministry that up to 6,000 MW capacity can be added at Kakinada. The Ministry is holding meetings with NTPC and CEA on the issue.

NTPC, however, is not keen on pursuing this option, according to industry sources. It has pointed out that its existing 350 MW capacity at Kayamkulam would be unviable unless it switches fuel to natural gas. The plant currently operates on naphtha, which makes the power expensive and non-competitive vis-à-vis alternative fuels. Hence, NTPC plans to raise the Kayamkulam plant capacity to 2300 MW and operate the plant on gas. In this direction, the power major plans to float a tender to set up a liquefied natural gas (LNG) terminal at Kochi.

NTPC has estimated that the 1950-MW additional capacity at Kayamkulam would be commissioned in the terminal year of the Eleventh Plan period (2007-08 to 2011-12).

Arguing the economic merit of the proposal, Reliance officials said that just as NTPC is setting up pithead power stations in the case of coal-fired power stations, a similar approach should be adopted for gas-fired stations.

Reducing or eliminating the transportation cost would bring down the tariff since fuel constitutes up to 60 per cent of the power cost for a new power plant, especially in the case of gas-fired power plants.

How can NTPC negotiate with a single party (Reliance) and arrive at a competitive fuel price? Reliance officials argue that the proposed generation capacity at Kayamkulam would cater to the entire southern region and not just Kerala. Also, NTPC is shortly set to open bids and arrive at the lowest gas price for its proposed capacity addition of 2600 MW at Kawas and Gandhar at Gujarat.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Reliance urges NTPC Kayamkulam plant relocation to Kakinada

Quarterly results: Adding to corporate burden?

S&P raises India's foreign currency rating to stable

HSBC may have to `pay more' for 14.7 pc in UTI Bank

`Govt to raise FDI cap in pvt banks'

Ads thunder before Indian wonder Down Under