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Sugar mills against direct power sale to States

Kohinoor Mandal

KOLKATA, Aug. 16

THE sugar industry wants the Union Government to authorise the Power Trading Corporation (PTC) to buy co-generated power from sugar mills and sell it to the power-deficit State Governments.

A top official of the Indian Sugar Mills Association (ISMA) said this was the only workable solution if the Union Government wanted to implement successfully the Prime Minister's vision of increasing the share of renewable energy by 10 per cent in the de cade ending 2012.

As a backup arrangement, the sugar industry -- which has the potential to produce about 5,000 MW from bagasse -- has urged the Union Government to create a new central agency if it is felt that PTC was already overburdened. What is clear is that industry is against striking any individual agreements with State Electricity Boards (SEBs).

``This central agency can purchase co-generated power at a uniform rate from all the sugar units and then supply it to the grids of various power-deficit States. In other words, co-generated power from the sugar industry will be treated as surplus power, '' the ISMA official said.

At present, PTC purchases power from surplus States and sells it to deficit States. All billing work is handled by it. On certain occasions, it has to bear the financial burden of payment delays by defaulting States.

Officials of the Union Power Ministry are against placing any extra burden on PTC. ``If PTC operates as a central agency for co-generated power from the sugar industry, its debt burden may not increase further, but it will have to improve its infrastruct ure and that is a costly affair. Instead of this arrangement, we feel that sugar mills can opt for direct third-party sales. It would encourage them to produce more power,'' one Ministry official said.

The ISMA official pointed out that the matter had been discussed with different State Governments. ``SEBs are against third-party sales by sugar mills. They say that such sales would affect adversely the existing cross-subsidization scheme of the boards. The SEBs will, therefore, continue to resist third-party sales by the sugar units,'' he said.

ISMA is also against signing power purchase agreements (PPAs) with State Governments. ``Many States have a negative approach towards independent power producers and they keep on revising PPAs. It has happened in Tamil Nadu and Uttar Pradesh. Moreover, th ere will invariably be a delay in payments,'' he added.