SPIC plans equity investments in power generation companies

Company's annual power requirement is 110 mn units; move will help reduce its power bills

Southern Petrochemicals Industries Corporation Ltd (SPIC) is planning to invest in power generation companies in a move that would help the company save substantially on its power bill.

The company said its annual power requirement of 110 million units is met through 80 million units from TANGEDCO and 30 million units from captive sources. The cost of TANGEDCO power is Rs 6.90 per unit.

The cost incurred works out to Rs 55.20 crore, excluding maximum demand charges. The cost of power from private power generating companies, as a captive user is considerably cheaper than TANGEDCO power and would help SPIC save substantially on the power bill.

Under The Electricity Rules, 2005, in order to qualify as a captive power user, atleast 26 per cent of the equity capital of the power generation company shall be held by the captive user and at least 51 per cent of the aggregated electricity generated shall be consumed by the captive user.

The company said it is in discussion with power generation firms and proposes to invest in their equity capital. This is expected to be about Rs 5.1-5.5 lakh a megawatt, returnable at the time of exiting from the power purchase contract.

Under such arrangement, the Company proposes to receive about 10 Mw power as against the TANGEDCO sanctioned power of 17 Mw.

The company sought shareholders' nod to invest in the equity capital of the power generation company(s) up to an aggregate amount not exceeding Rs 75 lakh.

On company's performance, the urea producing company said that during the year under review, the plant had a steady run between April 1 2015 to April 19, 2015 and again between May 20, 2015 to March 27, 2016.

The stoppage of plant for 30 days during April-May 2015 was due to delay in government approval for continuation of subsidy for naphtha-based urea plants.

During this period of shutdown, the company undertook repairs and maintenance activities to improve reliability, energy efficiency levels and increase production. Also Government has made it mandatory to produce only neem-coated urea from June 2015 onwards.

SPIC had installed neem coating facility and produced 100 per cent neem-coated urea since June 2015. Urea production achieved during the year 2015-16 was 620,426 metric tonnes compared to 491,905 tonnes in the previous year.

During the year, sale of manufactured urea was 623,475.20 tonnes and sale of imported urea was 146,700.35 tonnes.