The Hindu Business Line : GMR Energy to shift barge-mounted power plant to KG Basin

Speaking to Business Line, the GMR Energy Director, Mr P.B. Vanchi, said, "We are examining the shift, since it is easier to move power than move the fuel." The barge-mounted power project, the only such facility in the country, that became operational in 2001, has a power purchase agreement (PPA) with Karnataka Power Transmission Corporation Ltd (KPTCL).

Naphtha plant

The PPA is due to expire in 2007 and the State Government has so far remained reluctant to extend the validity, in view of the tariff concerns. This was because the facility is naphtha fired.

With international naphtha prices at over $500 a tonne, KPTCL has backed down the project, implying that there was no offtake of power from the facility.

The effective tariff from the project was well over Rs 6 a unit. Instead the preference was for offtake from lower cost hydel or thermal generating stations in the State. As a result the project was being paid only the fixed cost under the PPA, assuming a deemed generation at 85 per cent plant load factor.

Option of shifting

The project has the option of shifting to gas. However, Mr Vanchi said,

"There is no point in shifting to gas at Mangalore, since they are also high."

GMR Energy has signed a memorandum of understanding with the Gas Task Force sponsored by Bharat Petroleum Corporation and Kochi Refineries Ltd in March this year. But tariffs for gas are unlikely to be below $7 an mbtu (million British thermal units) or about $365 a tonne. Currently, the contract with KPTCL did not allow GMR Energy to resort to merchant sales from the barge-mounted facility to the other States or directly to customers on an open access basis.

Discussions under way

Next year when gas is available from KG Basin sources, we will be in a position to sell power directly to customers. Discussions were under way with potential suppliers. But there is little interest from imported sources.

"Unless tariffs are below $5 a mbtu, international sources will not be attractive," he added.

In fact, among the international sources for gas supplies included Petronet LNG, though tariffs from this source was still not indicated.