The Hindu Business Line : KPCL may hike tariff for Bellary station power

TARIFF from the Bellary Thermal Station, promoted by Karnataka Power Corporation Ltd, is expected to exceed the estimates, with the Centre turning down the State's demand for mega power status for projects with capacities of 500 MW.

The KPCL had estimated a power tariff of Rs 2 a unit on the assumption that it would be in a position to obtain a mega power status and consequently avail itself of tax exemptions. But the Ministry of Power has conveyed that only projects of 1,000 MW and above would be allowed to get this status and no scaling down could be permitted.

Sources said here that this would imply an escalation in the tariff by at least 10 paise a unit, since the duties would also have to be treated as part of the project's fixed costs.

However, the sources added, that if the new tariff policy was adopted, the project tariffs could still be brought down. This was because, the draft power tariff policy now before the Government had proposed a return on equity of 16 per cent on the basis of a 80 per cent plant load factor instead of the original 68.5 per cent PLF. Along with this, the incentive was also expected to be reduced to 0.4 per cent for every one per cent increase in the PLF beyond the normative level, the sources added. Both these elements would considerably neutralise the tariff impact of the BTPS, the sources added.

Meanwhile, KPCL has finalised the zero date for implementation of the project with the engineering procurement and construction contractor, Bharat Heavy Electricals Ltd. The frozen project is currently Rs 2,100 crore, with a 70:30 debt equity mix. The project debt is estimated to be Rs 1,470 crore and KPCL is expected to raise the amount at rates less than 10 per cent. Besides, the sources added, that there would also be cost savings since there would be no guarantee fee element payable to the State Government. Instead, all the project revenues would be assigned to the lenders along with a physical asset cover. Project lenders like the Power Finance Corporation and the State Bank of India have already indicated that such a mechanism was acceptable to them as part of a firm financial security package.

Fuel linkage for the Bellary thermal station has already been tied up with the coal mines in Talcher. Coal requirement is estimated to be in the region of 2.8 million tonnes per annum assuming calorific value of 3,000 kilo calories per kg and a plant load factor of 80 per cent.

The transportation is by rail up to Paradip, then by coastal shipping route up to Vishakapatnam and then again by rail up to Bellary.