The Hindu Business Line : Lower rates to save Rs 100 cr for new power projects in Bengal

NEW power projects coming up in West Bengal are set to reap a bonanza by way of lower costs on account of the reduction in interest costs recently effected by the Union Power Ministry.

Power sector sources said that with the Ministry deciding to provide an incentive for setting up these plants (within the current plan period), these projects will be financed at the rate of five per cent against 8.5 per cent agreed upon earlier.

The interest rate reduction is being effected by the Ministry under its Accelerated Power Generation and Supply Programme (APGSP).

This concessional rate is expected to benefit the 250-MW Santaldih thermal power project (expansion), the 500-MW Sagardighi thermal power project (Stage I), the seventh unit of the Durgapur Projects Ltd's power project and the expansion programme of the Bakreswar thermal power project.

The estimated savings on account of the 3.5 percentage point reduction would be above Rs 100 crore. The savings on account of the Bakreswar expansion project are yet to be worked out, sources said.

However, the interest rate reduction carries with two conditionalities — the letter of award for implementing these projects would have to be given by June 2004 and the projects would have to be implemented within the 10th Plan period.

Confirming this development, Mr Birenjit Pal, Managing Director of the West Bengal Power Development Corporation Ltd (WBPDCL), which is setting up three of the four projects told Business Line, that the savings would get reflected in lower tariffs for these projects. "Against the Rs 2.22 paise per unit tariff projected in the detailed project report, the actual tariff might be about Rs 2.09 per unit," he said.

WBPDCL was created in 1970s to takeover the Kolaghat Thermal Power Project from the West Bengal State Electricity Board. Three decades later, after the implementation of the State-level power reforms programme, it now owns and runs all the major thermal power stations in the State. These include the 1260-MW Kolaghat Thermal Power Station in East Midnapore, the 630-MW Bakreswar Thermal Power Station in Birbhum and two old power stations in Santaldih in Purulia and Bandel in Hooghly district.

The WBPDCL meets nearly 60 per cent of West Bengal energy demand of 25,000 million units. It is now trying to augment its capacity by implementing a coal cum gas based green field project at Sagardighi in Murshidabad district and two expansion projects — a 250 MW unit at Santaldih and two 210 MW units at Bakreswar. These projects would cost about Rs 5,000 crore. The new investments are considered necessary for meeting West Bengal's peak power demand in 2007-08 which is projected to increase by 30 per cent over the present 4,000 MW.

Referring to the Rs 1,541-crore Bakreswar expansion project, sources said the interest rate reduction would have to be worked out with the Centre since this is a project funded by the Japan Bank for International Cooperation (JBIC), which advances soft loans at five per cent. But the loans do not remain so soft for the project owner since the Centre imposes its own charges hiking the ultimate rate. Even in this case some reduction is in the offing sources said. Although not required in all the cases, the WBPDCL and the DPL, which are implementing these projects, have opted for the international bidding route for these projects which are being financed by the Power Finance Corporation and the Rural Energy Corporation.