The Hindu : New Delhi News : Focus on power generation losses

Online edition of India's National Newspaper
Tuesday, Oct 23, 2007
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New Delhi

New Delhi

Focus on power generation losses

Smriti Kak Ramachandran

NEW DELHI: Analysing the health of the two power generation companies in the Capital, the Power Finance Corporation (PFC) has suggested restructuring of four power stations that come under the Indraprastha Power Generation Company limited (IPGCL) and the Pragati Power Corporation Limited (PPCL).

The suggestion, however, comes with a caveat -- the restructuring of the stations is “necessary”, but not “a sufficient condition for the turnaround of these entities”.

Pointing out that IPGCL on a consolidated basis has been incurring losses, PFC in a draft report submitted to the Power Department for comments has recommended merger of IPGCL with PPCL.

Options

The draft report offers various restructuring options: “Merger of Gas Turbine Power Station(GTPS) with PPCL and reviving IPGCL; merger of GTPS with PPCL and winding up of IPGCL; or restructuring of IPGCL and merger with PPCL.”

While PFC is hopeful that the restructuring options will “only be the beginning and not the end of the process” of turning the generation companies around, Power Department officials do not share its sentiments.

“There is a problem with these mergers. Coal and gas-based productions vary vastly. There are two major gas-based projects that have been sanctioned for the city. Coal-based production is loss-making, which is perhaps the reasons for suggesting the merger, but it is better to keep the two separate,” said a senior Power Department official.

PFC’s suggestion aimed at making the Government’s financial liability go down has failed to persuade the Power Department, which wants to re-examine the options.

Identifying the reasons for the losses that the generation companies have been making, PFC has said: “The IP Station and the Raj Ghat Power Station of IPGCL have been continuously bleeding and the total accumulated losses till 2006-07 were around Rs.127 crore and Rs.98 crore, respectively.” It has also blamed the low PLF and high auxiliary consumption and non-approval of essential costs by the regulatory commission as reasons contributing to the losses.

The “unsustainable position” of IPGCL being projected as a reason for its restructuring, PFC has put forth that restructuring must be supported by continuous complementary efforts to enhance efficiency.

While the 247.5-MW I.P. Thermal Station benefits the VIP areas in South Delhi and Central Delhi, the 135-MW Raj Ghat Station caters to Central and North Delhi.

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