Naphtha-based power projects may see a new lease of life

New Delhi: The Central Electricity Regulatory Commission's (CERC) proposal to increase the maximum rate at which States can overdraw power from the electricity grid could ensure that expensive naphtha-based and other liquid fuel projects that are lying idle in the country begin generating power during peak hours.

With States facing higher penalties for overdrawing from the grid, they are likely to find it cheaper to switch to power stations operating on these expensive fuels.

Currently, about 500-700 MW of naphtha and liquid fuel generation capacity is lying idle, as there are no takers for the costly power generated by them. The CERC has proposed hiking the ceiling rate at Rs 7.45 per unit of electricity, compared with Rs 5.70 per unit currently, when frequency is 49.0 Hz or lower.

According to the CERC estimates, the landed cost of domestic naphtha for NTPC's combined cycle station at Auraiya was of the order of Rs 39,142 per tonne during March 2007, inclusive of excise duty of 16 per cent, education cess of 2 per cent, sales tax at 4 per cent, and freight and service charges on freight at 12.4 per cent.

Taking into account heat rate and auxiliary energy consumption, the energy charge works out to Rs 7.20 per kWh. 'With variable cost for the naphtha unit less than the proposed ceiling UI rate of Rs 7.45 per kWh, it should be viable to run it at least when frequency is 49.0 Hz or lower,' a CERC official said.