Date:11/01/2005 URL: http://www.thehindubusinessline.com/2005/01/11/stories/2005011101201700.htm

Back KSEB to seek regional status for Kayamkulam plant

Mony K. Mathew

Thiruvananthapuram , Jan. 10

IN order to reduce the huge financial commitment on account of the "dedicated" nature of the NTPC Kayamkulam thermal station, the Kerala State Electricity Board (KSEB) is seeking to get it converted into a regional station.

The entire power from the naphtha-based Kayamkulam facility, which went into commercial operation on March 1, 2000, is earmarked for Kerala as per the power purchase agreement (PPA) with NTPC. This means that KSEB has to bear the fixed cost, variable cost as also the wheeling charges all on its own.

But because of the high cost of naphtha, the variable cost of energy produced at the 360 MW station has been prohibitive and consequently, KSEB has been reluctant to utilise its full capacity. In fact, KSEB has stopped drawing any power from the station over the last five months.

Since January 2003, the Tamil Nadu Electricity Board (TNEB) has been allocated 50 per cent of the power from the Kayamkulam station for a period up to March 31, 2005. Thus, TNEB is now bearing 50 per cent of the fixed cost reducing the financial burden of KSEB to that extent. However, KSEB has continued to bear the transmission charges associated with the station's evacuation schemes. Now, the moot question is whether TNEB would continue the power purchase from Kayamkulam beyond March 31, 2005, as the variable cost is considered significantly high. If TNEB withdraws from the arrangement, KSEB will have to again bear the full fixed cost commitment.

The present PPA between NTPC and KSEB will expire on February 28, 2005, and if it is not renewed, the present terms and conditions will continue with KSEB having to pay Rs 1,140.34 crore as fixed cost commitments to NTPC and the Power Grid Corporation over the next five years. The Power Grid Corporation constructed the evacuation lines from the project.

As of now, the State's energy demand is adequately met by its hydel sources as also from import from Central power stations. Besides, KSEB is expecting additions to its installed hydel capacity in the coming months. So it can do without power from the Kayamkulam station for some more time, according to KSEB officials.

If the station is converted into a regional facility, the allocation of power from it to KSEB will be reduced to 22.5 per cent of the total capacity as per the Gadgil formula. It is estimated that the savings in fixed cost in such a scenario will be about Rs 884 crore over the next five years.

The suggestion for converting Kayamkulam plant into a regional station has come up in the context of NTPC and the Power Grid Corporation having already approached the Central Electricity Regulatory Commission for fixing the tariff for the period between April 1, 2004 and March 31, 2009.