The Hindu Business Line : TN looks at giving sops for captive power use

Power woes
The State Government is of the view power shortage can be averted if cos managed their needs by using captive power.
Industry bodies while welcoming the proposal say it may not be sufficient to tide over the problem.

Archana Venkat

Chennai, Feb. 11

The Tamil Nadu Government plans to incentivise industries to utilise captive power production units, in the light of the anticipated power shortage in the coming months.

The State plans to make companies move to captive power generation by removing the existing tax on captive units. Though this requires a legislative process, it would be done “if that is what it takes”, an official said. Additionally, the Government would look at providing sops to companies that go off the power grid during peak hours. This may include making power available at lower prices, he added.

“We have also asked the Centre to allot some of their un-allocated power from the (Central) grid to us,” he said.

A senior Government official told Business Line that many industries in the State had provisions (such as land and equipment within their premises) to set up captive power units but had not utilised them.

“Most captive units are under-utilised. We feel the power shortage situation can be averted if companies managed their demand-supply needs by utilising captive power,” he said.

Overdrawn its quota

Tamil Nadu faces a peak power shortage of about 8.9 per cent and the State has already overdrawn its quota from the Central grid by around 300 MW. The situation is expected to get worse in summer, when generation from hydel projects would decline.

It is understood that the State has about 3,500 MW of unregistered captive power-small sized generator sets that factories, apartment buildings and office complexes have. Most of this power is not used because it is costly, about Rs 7 a unit (for diesel generated power) compared to power from the State’s grid at Rs 3.68 a unit (regular hours) and Rs 6.25 a unit (peak hours).

Industry Unimpressed

The Southern India Chamber of Commerce and Industry (SICCI) along with other industry bodies had engaged in a dialogue with the State Government a few months ago on this issue.

Mr S. Raghavan, Secretary, SICCI, said that encouraging companies to use captive power was a good initiative, but it may not be sufficient to tide over the problem.

“We request the State to expedite the Centre to complete the Koodankulam power project besides pushing for completion of the Jayankondam and Cuddalore power stations,” he told Business Line.

Many in the industry note that there has been no addition to the generating capacity in the last seven years. Of course, there are many projects on the drawing board, but they would all take years to begin generating electricity.

Power projects totalling about 6,500 MW have been sanctioned in Tamil Nadu, of which over 50 per cent would be funded by the State. These projects are expected to be completed in a phased manner of over 4-5 years.

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