The Hindu Business Line : Gujarat, Karnataka jt venture plans for pithead-based power station fall through

Sources said that the project is stuck with the Chhattisgarh Government insisting on royalty payments for coal supplies of up to one rupee per tonne. In addition, the State Government has also sought dedication of up to 12 per cent of the project capacity entirely to the Chhattisgarh State Electricity Board, free of cost.

Sources said that the new conditions were imposed after the change of Government in Chhattisgarh last year. These conditions were applied in a bid to increase the State Government's revenue base and also improve the level of employment generation. Chhattisgarh has a small internal tax revenue base of barely Rs 2,600 crore.

Both these costs, the sources said, would have to be factored into the project's fixed costs. The conditions would also considerably escalate tariffs of power generated. The conditions implied that the JV partners would have to forego at least 1.5 million units per day out of the almost 10.2 mu generated.

Sources said as a result both Gujarat and Karnataka are reluctant to accept the conditions, since it undermined the economics in setting up a pithead-based station. The purpose of setting up a pithead-based station was to save on coal transportation and restrict capital costs to the barest minimum.

Both Karnataka and Gujarat are entirely dependent on coal supplied by Coal India Ltd and transported by the Railways. For transportation of thermal coal both States are entirely dependent on the Indian Railways.

Transportation over this distance sometimes involved delays and even losses of coal. But past attempts to enter into a long-term agreement with the Railways for coal transportation have failed to materialise over issues relating to "consequential liabilities."

Besides, the Railways was also not willing to assume responsibility over the quantity of the fuel delivered and has insisted that it was the responsibility of the consignor and the consignee.

Sources said setting up of pithead-based station would correct some of these problems. The initial estimate was that a pithead station would bring down power tariffs by at least 30 paise per unit. This was assuming the power evacuation would be done through the high voltage direct current transmission lines operated by the Power Grid Corporation of India Ltd. The initial estimates were of a power tariff of about Rs 2 a unit, inclusive of transmission.

However, the sources said the Chhattisgarh Government's conditions completely negated the economics of setting up such a station. The sources said that the new conditions would escalate the fixed costs considerably and bring tariffs in line with central power generating stations.

Faced with this kind of a situation, the State Governments have decided to wait for the new guidelines from the Ministry of Coal for allocation of captive mines for power generation.

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