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Krishnapatnam UMPP: RPower seeks...

Krishnapatnam UMPP: RPower seeks Centre's intervention

Reliance Power has urged the Centre to evolve a guiding framework to help find a solution for executing the Krishnapatnam ultra mega power project.
The company said Coastal Andhra Power Limited (CAPL), its subsidiary, would not be able to even service the debt with the revised coal price under the new Indonesian regulations. The company has already tied up Rs 13,100 crore as debt for the project.
The 4,000-Mw imported coal-based coastal power project is stuck midway after the company expressed its inability to move ahead with its implementation in view of the sharp rise in Indonesian coal prices apart from certain local issues.
The Central Electricity Authority (CEA) had on June 22 conducted a joint meeting with the power procuring states of Krishnapatnam project and the company. It asked CAPL to propose remedies under the power purchase agreement (PPA) besides explaining the exact impact on the agreed tariff from the new regulations.
“Being an industrywide issue the Government of India may be requested to take up the matter, and based on a wider consultation involving independent industry experts, evolve a guiding framework within which procurers and CAPL can shape a sustainable solution acceptable to all the stakeholders,” Suresh Nagarajan, director of CAPL, said in his subsequent letter to procurers, Ministry of Power and CEA last month said.
Among other proposals, the company suggested aligning of tariff structure in the existing as well as future PPAs for imported coal-based projects with the tariff structure in linkage coal-based Case II PPAs.
Though the company had won the Krishnapatnam project through tariff-based bidding by quoting Rs 2.33 per unit as supply price, it now wants a mechanism that allows automatic pass through of coal cost on to the end consumer as one of the solutions.
According to the company, it had submitted the bid in October 2007 at the prevailing FOB price at $24 per tonne for imported coal as against the current average FOB price of $60 per tonne, a 150 per cent rise. It had worked out the fuel cost per unit at Rs 0.87 at $30 tonne, Rs 1.45 at $50 tonne, Rs 1.74 at $60 per tonne and Rs 2.03 at $70 per tonne.
Going by these projections, the company at the time of bid submission had calculated the fuel cost at Rs 0.70 per unit. If the project moves to a two-part tariff based system, the supply price will be higher by more than Re 1 per unit excluding other aspects, which are also expected to impact the project cost.
The company also informed that it had approached the Indonesian government to exempt the already executed coal supply agreements from the ambit of the new regulation so that the project can be executed according to the existing PPA. It also requested the government to impress upon Indonesia to exclude the existing coal supply pacts from the new regulation.

“The new Indonesian regulations and similar legislative/ regulatory changes being contemplated in other prominent coal exporting countries will have an adverse impact on all imported coal-based projects. With nearly 13,000 Mw of such capacity under development, this has indeed become an industry-wide issue,” the company said.

 
     
 
   
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