Financial Daily from THE HINDU group of publications
Thursday, Dec 12, 2002

News
Features
Stocks
Port Info
Archives

Group Sites

Industry & Economy - Power


Karnataka power situation bleak

Our Bureau

BANGALORE, Dec. 11

THE power crisis in Karnataka is likely to worsen in summer, the State Government has finally conceded.

Briefing presspersons here on Wednesday, the Chief Minister, Mr S.M. Krishna, who holds the power portfolio and who is also Chairman of the Karnataka Power Corporation Ltd (KPCL) said, "Power is available, but we are not in a position to purchase in view of the limited resources."

"To overcome the bleak power situation, we will take a balanced view within the available resources," he added.

Asked whether the Government was prepared to reopen negotiations with Dabhol Power Company, he reiterated that the Government would examine the options based on the tariff.

He admitted that all original assumptions made in the power policy document prepared by the Government were no longer valid in view of low hydel inflows for two consecutive years.

Hydel storage levels were faced with a shortfall of at least 60 per cent, he said.

Mr Krishna, however, said that the synchronisation of Unit 7 of the Raichur Thermal Station, operated by KPCL would mitigate the summer situation. This would result in the addition of at least 5 million units to the grid.

Demand is currently regulated at about 80 MUs per day to match supply. With the availability from Unit 7, the situation is expected to improve.

Unit 7 with a capacity of 210 MW is expected to begin feeding in the next three to four days.

The final completion cost for the project has been estimated at Rs 600 crore and levellised tariff from the project has been estimated at Rs 2.04 per unit at 85 per cent plan load factor.

The commissioning of Unit 7 takes the thermal capacity in the State to 1470 MW from the current level of 1260 MW.

What is interesting is that the project has achieved synchronisation without achieving financial closure.

Unit 7 has not been able to achieve financial closure since some of the milestones signed in the multipartite agreement by the State Government and the lead arrangers, Infrastructure Development Finance Company are yet to be fulfilled.

These milestones include creation of a reform fund out of divestment proceeds out of the distribution companies.

By the Government's own admission there were difficulties in achieving these milestones. Mr Krishna said, "DisCom privatisation will take another two years."

As a result the entire debt funding for the project has been funded through short-term borrowings. The advantage of resorting to these short-term borrowings, KPCL was able to keep the costs of interest during construction down to the barest minimum.

The project soft cost is only Rs 93 crore since KPCL was able to resort to short-term borrowings from banks and financial institution at rates as low 8.5 per cent.

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
What makes Chinese economy click


Rs 9,045-cr supplementary demands passed
A pretty good service for all you know, sir?
ACM Medical Foundation donates diagnostic equipment
Ethanol makers, oil cos to discuss price issue today
Kolkata power utility may hike tariffs
Karnataka power situation bleak
`Quality power not burden of utilities alone'
`Global N-power industry on revival path'
Bengal zone tax refunds poised to go up 20 pc
IMRB launches radio audience research tool
Cable industry members meet officials
Learning maths the Casio way
GNIIT students to get lateral entry to KSOU
Tractor sales down 20% in H1
CETMA hails passage of cable TV Bill
FICCI pushes for reforms in farm sector for growth
Kanwar leads race for FICCI Vice-President
`Domestic carriers sell-off will be taken up at right time'
EIL sell-off set for smooth course
Cabinet Secy for implementing panel report on investments
Rs 18-cr loan okayed for TN backward class corporation
Poompuhar expo on in Hyderabad
Positive criticism is media's right, says former SC judge
Brand summit begins today
Foodgrains export to Bangladesh — FIEO urged to sort out rake shortage with Rlys
`Continuation of DEPB under review'
Under-invoiced imports hit cashew kernel prices
Concor package for exports to Bangladesh
Exim Bank credit for exports to East Europe
Earmark more funds for tourism: WTTC
Hyderabad tops in leisure travel growth: Taj group


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line