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M. Ramesh

Chennai, May 27

Electricity generated by Neyveli Lignite Corporation is sold to various State electricity boards at prices fixed by the Central Electricity Regulatory Commission—which is not very good for NLC because the prices are linked to costs and costs tend to dip as equipment depreciate.

Last year, its average realisation for the 17.5-billion units it produced was 1.75 a unit. Power sells in the market between Rest 3 and Rest 6 depending upon the location of the customer and the time of consumption.

Eighty-five per cent of NLG’s 2,490 MW capacity is tied to electricity boards. The other 15 per cent is distributed to various states by the Ministry of Power, which uses this capacity to manage deficits.

NLC is now telling the government; please let us price the electricity on the basis of demand and supply, just as the power traders do.

“This will improve our margins substantially,” Mr S Jay Raman, Chairman and Managing Director, NLC, told Business Line today.

NLC has requested the government that the 15 per cent capacity that is placed at the disposal of the Ministry of Power could be market-priced.

However, if the government felt that it needed the leeway to ration the electricity, allocating it to the neediest, at least the power produced by the plants that NLC is putting up now could be market-priced.

More Stories on : Outlook | Power

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