Directive On Liquid Fuel Quota May Hit Ap Projects

Prime Minister I K Gujrals directive that the states should strictly adhere to the liquid fuel quota fixed for short-gestation and mini power projects may affect Andhra Pradesh adversely.

The directive was reportedly issued in the context of Karnataka exceeding its allocation of 1,160 mw and including projects to add up to 1,900 mw when H D Deve Gowda was the Prime Minister.

Andhra got the highest allocation of liquid fuel for projects totalling 1,500 mw when the ceiling was announced by the Centre.

Based on this allocation, the state recommended to the Centre eight short-gestation power projects and 26 mini power projects, with a total capacity of 2,550 mw.

 

The state argued that the ceiling of 1,500 mw would apply only to short-gestation projects, which were big projects of over 100 mw.

Moreover, of the 800 mw capacity of mini power projects, as much as 572 mw was to be based on furnace oil.

However, the Centre took the stand that liquid fuel was not confined to naphtha and included furnace oil. It cleared five of the eight short-gestation projects for which the state electricity board had signed power purchase agreements with private parties and 10 of the 26 mini power plants for a total capacity of 1,629.96 mw.

If the Prime Ministers directive, that the ceiling of 1500 mw be strictly adhered to, is applied to Andhra Pradesh, four of the 10 mini plants cleared earlier by the Centre may have to be scrapped.

The five short-gestation projects cleared by the Centre do not include the controversial 272-mw project proposed by Nagarjuna Construction Company (NCC) at Ongole.

The NCC project was included at the 11th hour in place of the proposal of Calcutta-based Usha Martin for a 100-mw plant.

While the Usha Martin proposal got the fourth place in gradation, when the bids were evaluated by an independent consultant, the NCC project was far below.

This sparked off a controversy, with Usha Martin lodging a protest and the opposition parties in the state alleging that Chief Minister Chandrababu Naidu, who also holds the power portfolio, had some underhand deal with NCC. While clearing the projects, the Centre has conceded the state governments plea to keep the Vijjeswaram gas-based stage-II of 172 mw outside the 1500 mw allocated to it.

At the same time, it has gone out of the way to suggest that the 12-mw Green View project at Nandyal, once the Lok Sabha constituency of P V Narasimha Rao, may please be considered within the capacity allocated to the state of Andhra Pradesh.

Although the foundation stone for this project was laid by Rao three years ago, no work was initiated for a long time.

The Centre also agreed to keep outside the 1500-mw limit two barge-mounted projects, each of 100-mw capacity, proposed by Singapore-based Oakwell Engineering Ltd at Kakinada.

The Centre said it would shortly issue fuel linkage for a period of 15 years for the approved projects subject to the condition that the projects achieve financial closure and enter into agreement for firm fuel linkage within six months of the date of issue of provisional fuel linkage, failing which the linkage would be cancelled.

In the case of the two barge-mounted power plants, the fuel linkage will be for a period of seven years. The Union government said the quantity of fuel for the cleared projects had been worked out on the basis that the plants will operate at 80 per cent plant load factor and a consumption norm of 1.25 million tonnes per year per 1,000 mw for naphtha-based plants and 1.33 million tonnes per year for other liquid fuel.

Projects that have received provisional fuel linkage

Short-gestation projects:

Satyam Constructions Ltd: 300-mw naphtha-based project at Peddapuram in East Godavari district

Lanco Power Ltd: 355-mw naphtha-based plant to be located at Kondapalli in Krishna district

SEW Constructions Ltd: two projects of 100-mw each, one at Samalkjot and the other at Vemagiri, both in East Godavari district

Nippon Denro Ispat Ltd: 468-mw naphtha-based plant at Vemagiri in East Godavari district.

Mini power projects:

Shalivahana Power Corp: 34.56-mw project at Lingapur, Ranga Reddy district, based on fuel oil

Nagarjuna Electricity Generation Company (a unit of Nagarjuna Fertilisers & Chemicals Ltd): 20-mw naphtha-based project at Patancheru near Hyderabad

Lewis Stanley Energy Group Ltd: two units of 30.72-mw each based on fuel oil, one at Yellapur and the other at Hasanparthi, both in Warangal district

LVS Power Ltd: 46.08-mw fuel-based unit at Gazuwaka near Visakhapatnam

VSL Power India Ltd: 34.56-mw plant based on furnace oil at Parawada near Visakhapatnam

Vathsasa Power Projects Ltd: 15.40-mw plant based on furnace oil at Nimmapalam in Visakhapatnam district

Best Power Line Ltd: 34.92-mw plant based on furnace oil at Kandi in Medak district

Krishna Godavari Utilities Ltd: two naphtha-based plants of 30-mw each, one at Wadapalli and the other at Irikigudem, both in Nalgonda district

The last four mini power projects will have to be shelved if the 1,500-mw ceiling is strictly applied, as directed by Prime Minister I K Gujral.