Cuddalore Power will sell electricity at Rs 2.30 a unit'

Chennai: The 1,320-MW coal-based Cuddalore Power project will be among the least cost power producers in Tamil Nadu and will sell electricity at a levellised tariff of Rs 2.30 a unit, according to officials of the Tamil Nadu Electricity Board (TNEB).

At a public hearing on Wednesday, they made a strong pitch supporting the Cuddalore Power Company's application seeking the Tamil Nadu Electricity Regulatory Commission's (TNERC) approval to the power purchase agreement with the company.

They noted it was among those projects the board was planning on for enhancing the power generation capacity available with it in the next five years.

Responding to concerns over the high costs usually associated with Independent Power Projects (IPPs) in the State, they said that past experience was not a relevant yardstick to assess the Cuddalore Power Company's project.

The Cuddalore project was coal-based, whereas the high-cost IPPs were either naphtha or furnace oil fired, they pointed out.

According to the officials, under the PPA the project cost has been frozen at Rs 6,004 crore, the fixed cost contribution to the power cost would be Rs 1.22 a unit at 80 per cent plant load factor. On the variable cost, providing for $55 per tonne of coal as landed cost, the fixed cost works out to about Rs 1.08 a unit.

The TNEB has provided sufficient protection for itself in the 30-year power purchase agreement by capping the cost and allowing for any fluctuations in fuel costs, they said.

The IPPs, which were based on more expensive fuels, cost the TNEB over Rs 249 crore a month. These projects sell power between Rs 5.25 and Rs 6.50 a unit, but the board has to pay for the fixed costs whether it buys the power or not, under the `take or pay' clause.

As on April 1, the TNEB had a capacity of about 10,098 MW, but it has to resort to purchasing high cost power to meet the peak demand. The annual growth in demand is estimated at about 8-10 per cent over the next five years.

The TNERC also heard the objections to the project from the various sections of the community, including residents, fishermen, NGOs, and employees of TNEB.

They expressed fears about the environmental pollution in the area, the impact on natural resources and about the high cost of power for the TNEB if it were to depend on private power projects. The IPPs were a case in point, they said.

Company officials responded saying that the process of getting the environmental clearance for the project has been initiated.