Strange logic in surrendering NTPC power

By P. Venugopal

THIRUVANANTHAPURAM, AUG. 23. The full board of the KSEB is scheduled to meet here on Saturday to consider surrendering the claim over the power generated at the Kayamkulam NTPC station to the Central pool and for making a review of the stalled Kannur Power Project.

The State Government is understood to have already placed before the NTPC the suggestion that the electricity generated at the Kayamkulam plant be received into the Central pool. It was at the express demand of the State that the NTPC had earlier taken the decision to give Kerala the entire 350 Mega Watt (MW) of power generated at Kayamkulam.

The argument being given in support of this suggestion is that the power generated at Kayamkulam, using high- cost naphtha as fuel, is too expensive for the KSEB.

When the State's exclusive claim over the Kayamkulam power is surrendered, the State's commitment to draw power from this plant will come down to 77 MW. The remaining electricity will be allotted to the other southern States as their share, on the basis of the Gadgil formula.

However, if the NTPC agrees to the suggestion, it is certain to lead to power cuts and load-sheddings in the State almost overnight.

According to an internal note prepared by the KSEB showing the latest position in the power sector in the State, the total energy requirement during the current financial year will be to the tune of 13,064.1 million units (MU). The total availability of power after handing over the Kayamkulam NTPC station to the Central pool will be only 11,835.45 MU. Thus, when the Kayamkulam plant is converted into a regional station, there will be an immediate deficit of 1,228.65 MU in the State.

The note also makes an analysis of the power scenario for the next five years based on the availability of electricity from the existing hydel and thermal stations and expected increases in the flow due to capacity enhancement of projects in the State and under the Central grid.

According to this document, the expected energy deficit in the State when the Kayamkulam plant is surrendered to the Central pool will be 837.855 MU in 2002-03, 963.72 MU in 2003-04, 635.879 MU in 2004-05 and 272.045 MU in 2005-06.

As per this analysis of the KSEB, the deficit in terms of generation capacity will be 252.95 MW in 2001-02, 369.255 MW in 2002-03, 582.843 MW in 2003-04, 774.59 MW in 2004- 05 and 988.791 MW in 2005-06.

To put it in non-technical terms, when there is a deficit in energy availability, power cuts will become inevitable and when there is a deficit in generation capacity, there will have to be load-sheddings. Kerala faces the definite prospect of both these threats when the Kayamkulam NTPC station is surrendered to the Central pool.

The suggestion to receive the power generated by the Kayamkulam plant into the Central pool is being made by the Government, strangely, when the KSEB could not come up with a good solution to the problem of energy deficit which the State will have to face when it is accepted by the NTPC.

The latest period the State could bridge the energy gap created thus is 30 months from now, if the bottlenecks in the path of the Kannur Power Project, promoted by KPP Nambair and Associates, are cleared and it achieves financial closure immediately. But the irony of such a suggestion is that the Kannur Power Project too would be using the same high-cost naphtha as fuel as the Kayamkulam NTPC plant.

The NTPC plant as well as any other thermal power project which comes up in the State in the near future, will have to run on naphtha till the proposed LNG terminal of the Petronet is established in Kochi.

When the LNG terminal becomes a reality, the Kayamkulam plant will be the first to receive its advantage and bring down the price of electricity generated there.

The 513 MW Kannur Power Project had got stalled during the later phase of the previous LDF Government over the question of its foreign promoter. The KPP Nambiar and Associates had first brought the Enron as its foreign partner.

However, in the light of the bitter experience of the Maharashtra State Electricity Board in its association with Enron at Dhabhol, the LDF Government had declined to accept Enron's participation in the project.

The KPP Nambiar and Associates next brought El Passo, another American multinational company, as its partner next. This was also not approved by the LDF Government. There was also objections regarding the low level of investment the Indian promoters were ready to put into the project.

KSEB sources said the Indian promoter had recently obtained a clarification from the Central Electricity Commission that this ``insufficient'' local investment should not be considered as a bar. This clarification, according to the sources, is to be discussed at the KSEB Board meeting on Saturday.

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