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Our Bureau

Chennai, Oct.16 Over 250 MW of cogeneration power capacity that could be used to tackle the power shortage in Tamil Nadu is lying idle with sugar mills as the industry and the Tamil Nadu Electricity Board (TNEB) are not able to agree on coal pricing and power tariff.

According to industry sources, despite protracted negotiations between the sugar mills and the TNEB, the issue of coal pricing and power tariff could not be sorted out. The cogeneration plants, which supply surplus power to grid during the sugar season, when they use sugarcane fibre bagasse as fuel, could be run on coal during the off season (June – December) to supply power to the grid. The private sector sugar mills in Tamil Nadu have set up 397 MW of cogeneration power capacity, of this, over 250 MW could be exploited during the off season, when they can be operated on coal. But the TNEB, with the approval of the Tamil Nadu Electricity Regulatory Commission (TNERC), would have to agree to a viable power tariff.

According to the industry, the off season tariff was set at Rs 3.01 a kwh in 2003-04 when coal prices were around Rs 1,500 to Rs 2,000 a tonne. But at the prevailing prices, when imported coal is four times costlier, the industry is seeking a tariff hike to Rs 7.50 a unit.

In September, the sugar industry and the TNEB had arrived at a consensus on the power tariff and the electricity board had taken the proposal to the TNERC. The TNEB petition was to have been heard on Tuesday. But the regulatory commission rejected the petition and asked the board to go for competitive bidding after the electricity board represented that the tariff may have to be cut because of the possibility of a drop in coal prices in the international market, according to the sugar industry.

The industry contends that the drop in coal prices is not confirmed and the situation is volatile in the context of the international financial crisis. Interest rates are on the increase and working capital scarce. Also, even a $10 a tonne drop in coal prices would mean a Re 0.20 drop in the cost of generation of one unit of power. A leading public sector company tied up for coal imports at $135 a tonne last week (Rs 6,500).

According to industry representatives, the State could exploit the capacity in cogeneration units to advantage in the short term. The private sector mills are to add over 90 MW over the next one year. The 17 cooperative sector sugar mills have announced plans to add a total of 186 MW of cogeneration capacity over the next two years. This is a valuable resource at a time when the State is going through a power shortage and is considering exploiting power from diesel generation sets at a cost of Rs 12 a unit.

The industry suggests that if the TNEB is concerned over coal price fluctuation, the State Government could ask the TNEB to import the coal and supply to the cogeneration units. The TNERC should also be convinced to agree to a short-term pricing formula circumventing the conventional method for price computation.

It may be recalled that a couple of months ago the TNEB had called for bids from biomass-based power plants and cogeneration units to supply power to the grid but the tender met with little response with the bids submitted for less than 25 MW, according to officials.

More Stories on : Non-conventional Energy | Tamil Nadu

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