Keb Stalls Raichur Power Project Hits A Roadblock

The Rs 1,600 crore, 420 mw Raichur thermal power project has run into a roadblock with the Karnataka Electricity Board (KEB) raising objections over the EPC (erection, procurement, construction) contract.

Project promoters Kutub Power Company had earlier failed to furnish a revised DPR before the March 31 deadline which automatically called for it being scrapped. But the promoters wrote to the power ministry seeking an extension of the deadline. The ministry in turn wrote to the state government seeking its views.

According to state government sources, no decision has been taken on the issue as the state electricity board is understood to have expressed its unhappiness over the EPC contract for the project for which the promoters received only one bid.

The promoters have been in the thick of controversy ever since they were awarded three projects of 100 mw each at Bidar, Indi and Jamakhandi in north Karnataka. As the promoters did not receive fuel linkage for these projects, the state government offered them a coal-based project at Raichur for setting up a 210 x 2 mw plant through the memorandum of understanding route. The state government accorded the approval on June 17, 1997, and permitted the promoters to import coal.

Although the project has received permission from the department of irrigation for supply of 60,000 cubic metres of water per day from the Krishna river, there are still other necessary clearances, including those from the ministry of environment and forests, that are yet to come. Land for the project has already been identified. But talks for tying up of funds are yet to take off.

Amongst the projects being implemented through the MoU route, Cogentrix's 1000 mw Mangalore thermal power project and the 1,000 mw Nagarjuna thermal power project are the largest.

According to a study conducted by Investment and Credit Rating Agency (Icra), the demand for power in the state is likely to grow at over 8 per cent to touch 9,000 mw by 2012. Both the Mangalore and Nagarjuna power plants are expected to increase the SEB's capacity by over 30 per cent.

According to Icra, the state government's efforts to increase the power generation will start yielding results only in next 18 to 24 months provided most of the projects get implemented.

The total installed generating capacity in the state is around 3,500 mw .

with around 3,150 mw through stations owned and operated by Karnataka Power Corporation Ltd and around 350 mw through those owned and operated by KEB.

With most of the proposed power generating capacity being through the thermal route, the state's dependence on monsoons is expected to reduce.