The Hindu Business Line : Kerala expert calls for change in PPA with NTPC

THE power purchase agreement (PPA) between the State Electricity Board and the National Thermal Power Corporation on Kayamkulam Thermal Power Station is expiring on February 28 and its renewal, according to an expert, with the existing terms and conditions might be against the interests of the State.

However, according to official sources, discussions and negotiations have begun on extending the PPA. Kerala has not taken a single unit of power from the NTPC's Kayamkulam plant from the mid-May 2004 and yet had to pay around Rs 10 crore every month towards fixed charges due to the provisions of the existing PPA, Mr P. Parameswaran, Chief Engineer (retd), KSEB, who was instrumental in keeping the thermal power away and managing the power situation in the State successfully last year, told Business Line.

Kayamkulam Thermal power station operates on naphtha, cost of which has increased by around four fold during the last five years. So, the variable cost of energy from Kayamkulam Thermal power station increased four times.

The cost of naphtha was around Rs 5,000 a tonne when the PPA was signed five years ago and hence the variable cost of power from Kayamkulam plant was around Rs 1.25 a unit then. Moreover, Kerala was reeling under acute power shortage during that period.

Apart from the fixed cost, the variable cost had gone up to around Rs 3.80 per unit."Now, Kerala has got an opportunity to withdraw from this power purchase agreement. The State could save a minimum of Rs 120 crore per annum if we take such a step. NTPC should be persuaded to convert the Kayamkulam station into LNG immediately," he suggested.

According to Mr Parameswaran, Kerala can manage its power system without the support of Kayamkulam Thermal station. He said that the power consumption in Kerala has not grown recently as expected earlier, mainly due to the stagnation in industrial consumption.

"If Kerala goes for NTPC power to tackle the evening shortage this power is going to be a liability for the remaining 20 hours of a day. The evening demand has to be met by fully utilising the Hydel capability available here and by overdrawing from the Southern Regional System under the provisions of Unscheduled Interchange System. This procedure has been tested and found successful from May 2004 onwards," Mr Parameswaran said.

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