Tn Power Projects May Be Derailed

More than 200 bid documents have so far been sold by Tamilnadu Industrial Devel-opment Corporation (TIDCO), but industry sources believe the deadline for submitting detailed bids, may not be met.

A few weeks ago the state government had announced that 20 power projects of 100 mw each would be set up by private entrepreneurs in the next two years. These plants are to be based on naphtha, LSHS or fuel oil.

Power experts say of the three options, naphtha-based plants are the most efficient and will be the first choice for any private power generator. But, with no clear indication of naphtha availability in the country, prospective bidders will to adopt a wait-and-watch attitude. Naphtha supplies from domestic refineries have already been committed to power plants that have been cleared earlier.

 

The only option open to private promoters is import of naphtha. Although current international prices are lower than those in the domestic market and naphtha is an OGL item, imports still need the petroleum ministrys app-roval. The source of naphtha supplies will determine the cost and, hence, the viability of the plants. Imports, for instance, will also have to provide for transportation and storage costs.

A minimum of 15 days supply of naphtha is a must for any power generator, an expert told Business Standard.

The 20 mini power projects envisaged by the Tamil Nadu government were to have been set up in the escort sector, where TIDCO will hold a token 1 per cent stake.

The state agencys contribution will be mainly in the form of land made available for actual construction of the plant.

When conceived, these plants were to serve as substitutes for the mega private power projects that had not made any progress despite being cleared by the government a few years back.

Faced with a situation where demand for power will far exceed supply in a couple of years, the DMK government floated the tenders to overcome a crisis in the medium-term.