Power scenario: Concrete action yet to take shape

By D.K.Kishan Rao

RAICHUR, AUG. 23. A debate on the power scenario is not enough, but speed is of the essence in implementing projects and maximising generation. Karnataka has always faced a slowdown in capacity addition in the power sector, which, in turn, has affected industrial and agricultural growth.

In April, the State Government promised the farmers that they would get uninterrupted power supply at night from May. Yet a shortage of power has now hit the agricultural sector, and the Government has not found a solution to the crisis.

The demand for power, especially in the agricultural sector, has been increasing, and it may go up further in the coming months if there is a failure of the monsoon. The hydel reservoirs in the State are showing signs of depletion, and the Government may be forced to find alternative sources of power supply. It is even said that the Karnataka Power Transmission Corporation Limited (KPTCL) may be compelled to purchase power from private independent power producers (IPPs) at a high cost. Ultimately, the financial burden will fall either on the Government or the KPTCL which, in turn, will be passed on to the consumer.

The installed capacity from different sources is 5,625 MW. including 3,943 MW. from the Karnataka Power Corporation Limited (KPCL), 349 MW. from the KPTCL, 840 MW. from the Central grid and 493 MW. from private sources.

As of today, the demand for power in the State is 30,000 mu. annually, whereas the availability during this financial year both from hydel, thermal and oil-fuel based projects run by KPCL and KPTCL is 20,638 mu. annually, of which, KPCL plans to generate 10,638 mu. from hydel sources and 9,000 mu. from thermal sources; and the KPTCL expects to generate 1,000 mu of power. The shortfall is expected to be 10,362 mu. of which, 9,000 mu. is expected to be made up from the Central grid. However, there will still be a deficit of 1,400 mu. annually, but a part of it is expected to be filled up by way of obtaining 748 mu. from the IPPs--730 mu. from Taneerbhavi and Tata and 18 mu. from Rayalseema. There will still, however, be a shortage of 650 mu. of power.

Due to the fall in the storage level of hydel units this year-- the Sharavathi, Linganmakki, Kali, Supa and Varahi-- the estimated power generation from such sources is expected to come down by 1,100 mu. Hence, there may be a net annual deficit of 1,700 mu. of power.

On the other hand, the loss of power through transmission and distribution (T&D), which is estimated to be 36 per cent, could have been minimised if the Government had taken corrective measures. The steps taken by KPTCL have been inadequate. As such, Rs.3,000 crores will be required annually to modernise the network, against which the KPTCL expects to spend Rs.800 crores.

The demand for power in the State is between 75 mu. and 80 mu. a day against a daily generation of 46 mu. The balance is being met from the Central grid and the private sector. It is expected that the demand will increase by 10 to 15 per cent in the coming months, and it may even go up by 20 to 25 per cent in the peak of summer if the hydel storage levels do not improve.

The lack of foresight in assessing the power requirement and poor financial management have slowed down capacity addition. In the last two years, the Government has not launched any major thermal, hydel or gas-based power projects, except to add 60 MW. of power in February to the grid by commissioning long-pending hydel units.

The deficit remain unbridged. The Chief Minister, Mr.S.M.Krishna, in his Budget speech, had assured that the Government would invest Rs.10,000 crores on power projects with a combined capacity of 2,000 MW. and complete them by 2006. These included the 210 MW. Seventh Unit of the Raichur Thermal Power Station (RTPS), the 297-MW. Almatti Dam Power House, the 500 MW. Vijayanagar Thermal Power Station (VTPS) and the 220 MW. Bidadi Combined Cycle Project. The remaining 800 MW. addition would be from the IPPs.

Against this, the Seventh Unit of the RTPS is the only project on which work has progressed since October last. It is expected to be commissioned by March 2003. In the case of the Almatti project, the KPCL plans to launch work on it by October under a joint venture and complete it in 28 months. However, the project may be delayed as the Government recently decided to take up the project with a combined package of 297 MW. at a time.

Although the Government decided to continue providing escrow cover for liquid-fuel power projects, it withdrew this to IPPs, including public power sector projects. But it decided to give a guarantee for the debt-funding component of the Almatti project and to continue providing escrow cover for a few other liquid- fuel power projects.

The Government has withheld the payment security mechanisms for a few IPPs which have sought legal recourse for settlement. The signing of a Power Purchase Agreement is crucial for the IPPs. But the State Government's new concept of restricting the tenure of the PPAs to five years has proved to be a major hinderance in fulfilling the minimum debt servicing coverage ratio imposed by financial institutions.

Any further delay in launching the projects will enhance the cost of the projects, and they may not match the Government's benchmarked tariff structure. These factors may hit the interest of the IPPs in launching their projects in a time-bound fashion.

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Section  : Southern States
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