Cabinet approves power projects

By Our Special Correspondent

HYDERABAD, DEC. 11. The A.P. Cabinet today approved the recommendations of a high-level task force headed by the Chief Secretary for expanding and expediting short gestation gas-based power projects with a total capacity of 1499 MW in the first phase.

The highlight of this development is that independent power developers (IPPs) have been given the vital gas linkage after they agreed to the Government's condition that they accept the lowest tariff quoted earlier by M/s Gautami Power Limited.

The tariff works out to less than Rs. 1.80 per kwh calculated on the basis of six US cents towards debt servicing charges (at the current exchange rate) and levelised tariff of 94 paise. This will be the lowest tariff for any project in the country, including the 1850 MW LNG-based plant at Ennore in Tamil Nadu, finalised after international competitive bidding. It is pointed out that the low foreign exchange component in the tariff structure would ensure that the tariff will not rise even if the rupee value falls.

Briefing reporters, the Minister for Information, Dr. N. Siva Prasad, said the projects approved by the Cabinet were: M/s. Konaseema EPS Oakwell Power Limited with an enhanced capacity of 445 MW (at Ravulapalem), M/s Vemagiri Power Generation Ltd. (Ispat group) 520 MW in two stages of 370 MW and 150 MW (at Vemagiri near Rajahmundry) and the consortium of M/s Gautami Power Limited and NCC Power Corporation with a capacity of 464 MW in the first stage and 133.9 MW in the second (at Peddapuram).

M/s. GVK Industries Limited has been allowed to implement its expansion project at Jegurupadu in two equal stages of 220 MWs each as it has fulfilled all the conditions earlier and had now agreed to reduce its tariff by three paise a unit to bring it on a par with others.

All the IPPs are expected to achieve financial closure by March 31, 2000, for which the Government has offered the necessary assistance. The first units of Konaseema-Oakwell and Vemagiri are scheduled to go on stream in March 2002 and the remaining before October that year.

The short-gestation projects, conceived in 1996-97 with a total capacity of 1800 MW, had to be reworked because none except Kondapalli Power Corporation could achieve financial closure because of steep rise in naphtha prices. The Centre has since promised allotment of gas for running the units.

As the allotment would meet only 70-75 per cent of their actual requirements, the IPPs approached the State Government to permit them to implement the projects in two stages and allow them to form consortia. The first and second stages together envisage a capacity addition of 2002 MWs.

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