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Kayamkulam plant in limbo

By A. Harikumar

ALAPPUZHA, DEC. 2. A more than four-fold increase in the price of naphtha during the last six years following the deregulation of prices of petroleum products has cast a shadow on the future of the National Thermal Power Corporation's Kayamkulam power plant.

The plant uses naphtha as its fuel. The price of naphtha which was around Rs.6,000 a tonne in 1998 has increased to Rs.26,000 now. Consequently, the cost of power generated by the plant has gone up from Rs.2.50 a unit to Rs.4.50. Subsequently, the NTPC has been forced to raise the power tariff, one of the costliest in the country.

Following this, the buyers of power from the plant have all backed out. The total generating capacity of the station is 350 Mega Watts. The entire power generated there was being sold to Kerala and Tamil Nadu. Both the States have stopped buying power from here. No other State or institution has evinced interest in buying power from there at the present rate.

Power generation has been stopped at the station during the last seven months. And the plant survives on the fixed cost of Rs.20 crores being provided by the Kerala State Electricity Board (KSEB) to the NTPC every month.

The present power purchase agreement between the KSEB and the NTPC will come to an end in February 2005. It is pointed out that the KSEB is unlikely to purchase power from the Kayamkulam plant next year also as the good monsoons have filled the State's dams and boosted the production of hydroelectric power.

Projects to be hit

The scenario is likely to have an impact on the development plans of the power station. According to the proposed plan for expansion, the generating capacity of the station is to be increased by 1,950 MW. This will make the plant one of the biggest in the country.

According to the proposed plan, Liquefied Natural Gas (LNG) is to be used as the fuel in future. The NTPC has floated global tenders for purchasing LNG. But it is learnt that only two companies have responded. According to earlier plans of the NTPC, the expansion works are to be completed by 2007. But in the present situation this seems to be an impossible task.

Experts in the power sector say that the Central Government's intervention is essential for bringing down the price of naphtha being supplied by public sector petroleum companies. In the long term, the plant should be switched over to LNG, they say.

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