The Hindu Business Line : SIMA plans captive power plant at Tuticorin

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Chennai Feb. 6 The Southern India Mills' Association (SIMA) plans to set up a 500-MW captive power plant at Tuticorin, Tamil Nadu. The coal-based plant is likely to cost Rs 2,400 crore.

The association representatives are likely to meet State Government officials on Wednesday to seek land allotment for the power plant and for a jetty to handle coal imports.

Mr Manikam Ramaswami, former chairman, SIMA, told newspersons that the association would set up a special purpose vehicle (SPV) for the power plant. SIMA would hold 51 per cent in the SPV and other investors, including IL&FS, have shown interest in the project.

He said power could be supplied to SIMA members at Rs 2.40 per kWh, which is much lower than the existing rate of Rs 4.20 per kWh.

High cost of power

Mr S.V. Arumugam, Chairman, SIMA, said the association came up with this proposal because of the high cost of power in the State. The power cost in the neighbouring States is lower, he said. In Andhra Pradesh, for instance, it was only Rs 3.11 per kWh and for expansion and new units it is only Rs 2.35 per kWh.

Mr Ramaswami said many textile units were leaving Tamil Nadu because of its high power cost.

Annual loss

He said last year SIMA members had projected an annual loss of Rs 800 crore owing to power tripping in the textile mills.

He said the power tripping was not uniform across the circles or within the same circle.

Mr Arumugam said SIMA is willing to request members who have furnace oil based power generating sets to start using them to full capacity.

It would become economical if the Government waives notional income from idle sets — power generation tax, sales tax on fuel oil, waiver of maximum demand charges to the extent of maximum demand not availed of.