Nalco stops drawing expensive grid power from Odisha

Jayanta Mallick Kolkata | Updated on October 29, 2012 Published on October 29, 2012

To rely more on captive units to peg costs

National Aluminium Company Ltd (Nalco) has ceased to draw costlier power from the Odisha grid. It will now rely on captive power. According to Nalco sources, the management took this decision to reduce the cost of power purchased, since it affected profitability in the second quarter ended September 30.

Nalco reported a 98 per cent decline in quarter on quarter adjusted profit after tax in the quarter to September 30.

“Profit during the quarter (Q2) as compared to preceding quarter is substantially lower due to increase in power and fuel cost by about Rs 108 crore and lower sales volume of alumina by Rs 101 crore arising out of lower production”, the company said. The lower output was due to non-availability of adequate power. Nalco spent Rs 7.15 a unit for power purchased from the grid against the captive unit cost of Rs 3.20. In the July-September quarter, Nalco purchased grid power worth of Rs 80 crore.

State grid

A Nalco spokesperson told Business Line that the company had to depend on State grid power in August. “In September, we reduced the grid power usage substantially and, in October, there was no drawal”, the spokesperson said.

Currently, seven (120X7= 840 MW) of the 10 captive power plants were running, company sources confirmed.

Owing to quality domestic coal shortage, the Government-owned integrated aluminium manufacturer had to shut down two units during the quarter and scale down production.

This month Nalco received coal supplies from Mahanadi Coalfields Ltd’s Bharatpur and a few other mines.

Nalco reportedly had held MCL responsible for not supplying adequate coal, in violation of the fuel supply agreement (FSA).

MCL, however, had claimed that it requested Nalco to lift stock from other mines in the same region because of some clearance issues at Bharatpur.

The FSA takes care of around 90 per cent of Nalco’s coal needs.

The balance is met through imports and e-auction purchases.

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Published on October 29, 2012
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