The Hindu Business Line : Mega project status likely for Bellary Thermal Power Station

THE Bellary Thermal Power Station (BTPS), promoted by the state-owned Karnataka Power Corporation (KPCL), is likely to be upgraded into a mega project.

Sources said that the Congress-led Government at the Centre was in favour of accepting the demand of the States for reduction of the threshold for mega power status to 500 MW from the present level of 1,000 MW. In fact, last year some States, including Karnataka, had sought this relaxation in the power policy on the ground that tariffs would come down substantially. A mega power status allowed projects to avail themselves of customs/excise duty exemptions.

Sources said that extension of the mega power status would now allow some of the state-owned projects to bring down fixed costs.

KPCL's Managing Director, Mr K. Jothiramalingam, said, "The costs will come down by at least Rs 400 crore." As a result, power tariffs are expected to come down by at least five paise per unit. This would result in

lower levellised tariffs of BTPS to less than Rs 2 a unit, making it the cheapest green field thermal power station in the country. However, for availing of the mega power benefit, KPCL would have to convert BTPS into an inter-State power project.

The sources said that arrangements for converting it into an inter-State project would be worked out after discussions with some of the neighbouring power-deficit States.

The 1,015-MW Nagarjuna Power Project near Mangalore has been accorded the mega project status. Nagarjuna has entered into a power purchase arrangement with neighbouring Kerala.

BTPS has already gone into financial closure with about 22 banks and financial institutions extending debt finance of Rs 1,680 crore or about 80 per cent of the total project cost of Rs 2,100 crore.

Loan structuring has been done for a period of 14 years at an interest of 7.5 per cent. Equity amounting to Rs 420 crore was to be brought in by KPCL, entirely out of internal accruals, since BTPS was expected to be a balance sheet project.

Coal linkage for the project has already been finalised from Talcher in Orissa.

The requirement of washed coal was expected to be about 2.8 million tonnes per annum, assuming a calorific value of 3,000 kilo calories per kg and a plant load factor of 80 per cent.

The engineering and procurement construction contractor for the project is BHEL. BHEL has committed to completing project construction in 36 months .

On completion, BTPS was expected to add at least 3,300 million units per year into the southern grid.