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Kannur project in fresh controversy

Our Bureau

THIRUVANANTHAPURAM, Sept. 18

THE latest controversy involving Kannur Power Project Ltd (KPPL), proposed to be set up by K.P.P. Nambiar and Associates in Kannur district of Kerala, is turning out to be a major issue for the State Government.

The row was sparked by the reported intervention of the Electricity Minister, Mr S. Sarma, to get KPPL dropped from the list of power projects proposed to be taken up for follow-up action during the Prime Minister's visit to the US. The 513-MW project ha s Elpaso Energy, the US-based power major, as the foreign partner.

It is alleged that the Minister had telephoned the Joint Secretary, Power, at the Centre to inform him that the State Government was not for the Kannur project but favoured purchasing power from the Ennore project in Tamil Nadu being promoted by Grasim I ndustries in association with a consortium of foreign investors.

At a press meet in Kochi on Sunday, Mr. Sarma had denied the reports that the State Government had taken a stand against the Kannur project. He also said that his Ministry had not communicated anything to the Centre that would have affected the signing o f an Indo-US pact facilitating the project.

He had noted that the Government had only expressed its interest in the Ennore project to tide over the power crisis which the State was likely to experience in 2003. Moreover, the State Government was informed of the participation of Elpaso in the proje ct only a month ago.

Mr K.P.P. Nambiar, the promoter of the project, however, contested the statements the Minister made in Kochi. He told newspersons here on Monday that the Joint Secretary had confirmed to him about the telephone call.

He said the project, for which a memorandum of understanding was signed way back in 1995, had been held up for various reasons. First, it was the opposition to the participation of Enron in the project. Subsequently, Enron pulled out of the project in Ap ril 1999.

He said the project was restructured and put up with the State Government in July 1999. But, the State Government took nearly seven months to forward the proposal to the Central Electricity Authority (CEA) which finally cleared the project in January thi s year.

The project was put up for techno-economic clearance of CEA in February this year. Mr. Nambiar claimed that all the relevant details about the new partner, Elpaso, was submitted to the State Government and other authorities, including the Chairman of the Kerala State Electricity Board (KSEB), in March itself, and not just one month ago as stated by the Power Minister.

In reply to a question, he said that though the details of Elpaso were provided in March, a formal letter in this regard was given to the Government more than two months ago in July.

He said that at a meeting in Delhi on August 16, KSEB had favoured Kannur project. But, at the full board meeting of KSEB on August 23, it was decided to purchase power from Ennore project without any discussion. Obviously, it was under a Government dire ctive, Mr. Nambiar said.

He said he always had the backing of the Chief Minister and other senior party leaders, except the Electricity Minister, for the implementation of the project.

He said the Ennore project was being implemented through a consortium of four foreign multinationals. And, how could the State Government favour such a project when the very mention of ``multinational'' is anathema to it, he wondered.

He further pointed out that the 1,886-MW Ennore project had received escrow cover to the extent of only 750 MW from the Tamil Nadu State Electricity Board. Andhra Pradesh had declined to buy power from this project as it gave importance to power companie s coming up in the State.

Besides, the Ennore project would take five-six years before being commissioned. Also, the tariff structure was yet to be worked out for the power generated there. In this context, he said the power generated at Kannur project would be cheap as its capit al cost was one of the lowest in the country.

Mr. Nambiar said he had already given a representation to the State Government to immediately approve the participation of Elpaso in the project. Also, the Government should ensure that the power produced by KPPL was purchased in full by KSEB as per the existing commitment in the power purchase agreement with the board and approved at that time by the Council of Ministers, before considering purchase from outside the State.