K'taka sugar mills seek leeway in power supply

Sugar mills in Karnataka, which have been approached by the state government to supply power to the state grid, have found the state’s proposal non-feasible. The mills are seeking certain modifications in the government order (GO) issued on December 17.

According to industry sources, the mills are not happy with the condition put forward by the government, which stipulates that they should produce power using bagasse and coal in the ratio of 1:2. On the other hand, the mills say they should be given the freedom to choose whichever raw material they think is suitable to them.

In Karnataka, some factories have the capabilities to use only bagasse as raw material to produce power, while some others have gone for new technology machines that can use coal in the absence of bagasse. “We are asking the government to remove the condition and we hope they will agree to our demand,” the sources said. The state energy minister has convened a meeting in this regard on January 7 to negotiate with the sugar mills.

Currently, of the 52 active sugar mills, 19 mills have cogeneration units and have a combined capacity to produce and supply around 412 Mw power. While, 12 of them have entered into a power purchase agreement with the Karnataka Power Transmission Corporation Ltd (KPTCL) for supplying around 250 Mw power, eight mills have open access (third party sales) and are selling power to private players like Reliance, Tata Power and others.

In November last year, the state government decided to purchase 220 Mw of power from cogeneration sugar mills to tide over the power crisis and revised the power tariff for such mills from the earlier Rs 2.80-3.80 per unit to Rs 7.25 per unit and issued a government order to this effect. However, the GO came as a surprise to many mills as the condition put forward by the government was not acceptable to them.

“We are ready to supply excess power to the state grid at the price arrived at mutually between the KPTCL and mills. But the government says they will give us the stipulated price only when we adhere to their condition on using bagasse and coal in the ratio of 1:2. What we are telling the government is that the decision to use raw material in any ratio should be left to the mills. Since this arrangement is going to be in force only for six months, the government should not worry about other things and look for purchasing power only,” industry sources told Business Standard.

The unrestricted peak demand is about 7,500 Mw due to increasing consumption by agriculture, industry and domestic sectors. The average consumption has shot up to 120 million units per day this year from 99 million units per day last year, registering an increase of about 20 per cent.

Bangalore accounts for 35 per cent of the consumption. Of the installed 5,510-Mw capacity in the state, hydel units account for about 60 per cent (3,322 Mw).