The Hindu Business Line : Captive power plants at industrial parks

"This will destroy MSEB. Roughly 56 per cent of our revenues come from industrial customers and more than 90 per cent of these customers are located at the MIDCs. "

Mumbai , Oct. 11

THE Maharashtra Government has called for final bids from Tata Power, Reliance Energy, Wartsila, L&T and BHEL to set up captive power plants at state-owned industrial parks by October 15.

This move is expected to prove a definite setback to the Maharashtra State Electricity Board, which was hitherto the sole energy supplier to the industrial estates run by the Maharashtra Industrial Development Corporation.

At present, power sales to commercial consumers, especially in industrial parks or areas developed by the MIDC, form more than half of the total power sold by the cash-strapped MSEB.

"This will destroy MSEB. Roughly 56 per cent of our revenues come from industrial customers and more than 90 per cent of these customers are located at the MIDCs. Besides, this is the only segment that pays the board," said a senior MSEB official, who wished not to be named.

As per the new plan, the private power companies will set up captive generation units at various MIDCs, beginning with Thane-Belapur and Nagpur. Companies located in the industrial parks would then have the option to buy power from the captive plant, thus cutting MSEB out of the scheme of things.

PricewaterhouseCoopers, the agency that has been appointed by the Maharashtra Government as advisors, said the plan has been formulated under provisions of the Electricity Act 2003 that allows "group captive generation".

The company willing to produce and sell power at the most "reasonable" price will set up a gas-fired unit at Thane-Belapur that can receive gas from the proposed 489-km Dahej-Uran gas pipeline and one coal pithead plant at Nagpur, the agency officials said.

"We have issued draft requests for proposals a few weeks ago and are in the process of preparing the final RFP draft. We will be fine-tuning the open access arrangements and also speak to all parties involved, including the MSEB, the State Government and various companies," Mr Ranajit Banerjee from PricewaterhouseCoopers told Business Line.

The idea was originally mooted by industries in two industrial parks, according to a senior MIDC engineer in charge of the project. MIDC will provide "land, infrastructure and may even invest something in the distribution (network)," he said.

The proposed projects will generate 100 to 150 MW, even as Maharashtra is facing a peak shortage of 2,000 MW. As the Electricity Act, 2003 does not require anyone to seek permission for generation or distribution of power from a captive plant set by a group for its own use, MIDC's need to "facilitate" the proposed projects has irked consumer activists. This, even as activists and power sector analysts agree that the MSEB is not in a position to complain about losing business through the proposed projects.

"The MSEB charges industries about Rs 4 per unit, which is quite reasonable compared to any other State. However, one also needs to consider factors such as uninterrupted, high quality power supply and good service. The MSEB does not score high on these fronts. And with the Electricity Act, 2003 freeing restrictions on power purchases, more companies are sure to follow suit," said Mr Ashok Pendse of the Mumbai Grahak Panchayat.