Our Bureau

Thiruvananthapuram, March 1

THE Kerala State Electricity Board (KSEB) has reached a broad understanding with the National Thermal Power Corporation (NTPC) on the terms for renewing a power purchase agreement (PPA) for the Kayamkulam thermal plant.

The new PPA has been necessitated by the expiry of the earlier agreement on Monday. Incidentally, the plant has been lying inactive for over six months , owing to the inability of KSEB to draw the high-cost power from there.

The 360-megawatt (MW) Kayamkulam station is as fully dedicated to Kerala, which means that the State is entitled to the entire power generated there. KSEB has to pay a monthly fixed cost of Rs 20 crore to NTPC irrespective of whether it draws power from the station or not.

However, the high cost of power from the naphtha-based station has proven to be a big burden on KSEB.

At the prevailing price for naphtha, the cost per unit of power from the station works out to between Rs 3.60 and Rs 3.80 and if the fixed cost is also added to it, the cost will be around Rs 4.70 per unit.

Though KSEB had stopped drawing power from the station for more than six months, it has been paying the fixed cost to NTPC.

According to top sources in KSEB, the new PPA being drafted envisages bringing down the share of the State from the station to 180 MW. This will also reduce the board's liability towards fixed cost by 50 per cent to Rs 10 crore a month.

At the same time, NTPC has agreed to give 110 MW of low-cost power to KSEB from the Eastern grid for two years to compensate the latter for the high cost of power from Kayamkulam.

The cost of power from the Eastern grid is around Rs 1.60 per unit. The Board is also negotiating with NTPC to have the allocation from the Eastern grid enhanced to 180 MW.

The sources said that the Tamil Nadu Electricity Board (TNEB) has agreed to purchase the remaining 180 MW from Kayamkulam and bear the other 50 per cent of the fixed cost.

In fact, TNEB had been having such an agreement with NTPC for a period since May 2002, by which it was getting 180 MW from the Eastern grid to even out the high cost of power from Kayamkulam.

(This article was published in the Business Line print edition dated March 2, 2005)
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