Balagarh Power Lines Up Rs 240cr Transmission Unit

The Balagarh Power Company in which CESC Ltd will have a stake of 35 per cent has submitted a Rs 240 crore transmission project to the state government for evacuating the power generated from its 500 mw project.

The cost of transmission will range from 23 paise in the first year to two paise in the 30th year. On an average, the transmission cost is estimated at about 7.5 paise a unit.

The transmission project is critical to the power project as it will sell power exclusively to CESC Ltd. Balagarh is located on an island about 30 kilometers outside the licenced boundary of CESC.

 

CESC had objected to the West Bengal State Electricity Board's demand that the Balagarh power should be wheeled through its transmission network. CESC had claimed that the transmission cost will be a mere four paise per unit if it is allowed to construct its own transmission line. However, as the state government asked the company to submit the detailed project report, the cost was found to be much higher.

It is the third alternative scheme submitted by the RPG utility which is under scrutiny by the state government.

While the first scheme was too costly, the second one was made artificially cheaper by excluding certain essential components of the project like sub-stations.

Both were rejected by the state government.

The latest, Rs 240 crore proposal also includes the interest during construction.

The cost of the project will be recovered over 30 years. The average transmission tariff, which has been calculated at around 7.5 paise a unit, is nearly double the rate of four paise originally promised by the RPG group.

The first year's rate of 23 paise a unit will be extremely high though the rate will gradually taper off to two paise per unit in the 30th year. It remains to be seen if this proposal finds acceptance by the state government.

A state government letter, issued in the middle of November, stating that Balagarh power will be required in 2002 was delivered at a time when the state power minister, Sankar Sen, was abroad. The minister and WBSEB believe that Balagarh power will not be required before 2005.

Despite the clearance issued in the absence of the minister, it is not clear if the state government will show a sense of urgency to clear the transmission project.

If Sen has his way, he may well delay the commissioning of the Balagarh project.

If the demand for power grows at the current rate, an early commissioning of the Balagarh units will result in the shutting down of generating units at state-owned power stations.

Any final government nod for the Balagarh power evacuation scheme is therefore expected to take all these factors into consideration.

The bottomline is that what could be good for RPG may not necessarily be good for WBSEB, WBPDCL and DPL.