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IPP Policy - Need For Review of IPPs and Formulation of a Policy |
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- Presently, KPTCL is continuosly facing revenue as well as
capital deficits, and finding it difficult to manage its finances and earn a reasonable
return. For the year 1999-2000, KPTCL has reported a revenue deficit of Rs.1051 crores. In
its ten-year financial plan under "base case with tariff increase of 12%
CAGR in first years and 10% CAGR over ten year period", KPTCL has
projected a total deficit of Rs 12200 crores to meet the revenue and capital subsides as
well as pension commitments
- Hence, the Government of Karnataka has felt a need for
formulation of an IPP policy to be consistent with the financial capabilities of the
utilities as well as the Government, able to enable the IPPs to come out with the
proposals, which are cost effective, environmentally compliant, and with consistent
technology.
- The Government has also taken note of the fact that the
procurement of additional capacities should be based on
(a) availability at the time of requirement.
(b) availability at least cost pricing.
(c) available capacity to be equal to required capacity to avoid deemed generation
payments
(d) location and load specific projects to minimize transmission losses.
- The high level Committee on Escrow Cover to IPPs constituted
by the Government of Karnataka, had recommended to the Government, among other things, as
follows:
(a) The GoK, as owner of KPTCL should not provide escrow cover to any IPP;
(b) The process of transferring the distribution system to private ownership be completed
as soon as possible;
(c) In order to ensure that the energy supplied is produced at least cost, it is essential
to structure contracts to enable the dispatch of generators on a strict merit-order;
(d) All future development of thermal capacity in Karnataka should be in private sector;
(e) However, case capacity additional from IPPs are inadequate, then GoK may take steps to
strengthen KPCL to meet this requirement in the interim;
(f) Location-specific and load-specific generation using predominantly renewable fuels
must be encouraged.
- Keeping in the view the above, a Committee to look into the
issue of IPPs and make policy recommendations was set up under the Chairmanship of the
Principal Secretary to Government, Energy Department. The Committee examined the
projections made by KPTCL under Base Case, assuming normal industrial growth rate of 5.29%
as well as additional industrial growth anticipated from out of Global Investors' Meet
(GIM Scenario). The Committee also took note of the estimated financial deficits amounting
to Rs. 12000 crores, upto the FY2010, in the financial projections made by KPTCL, under
"moderate tariff increases".
- For this purpose, energy and demand requirements will have to
be worked out carefully atleast for a Ten-year horizon. However considering the past and
present trends in consumption by various classes of consumers and also the financial
limitations to which KPTCL is exposed, the requirement of additional capacities has been
estimated to be 3101 MWs, by the Consultants engaged by KPTCL for thsi purpose.
- Another exercise has been carried out by a member of the IPP
Committee after taking into account
(a) the low frequency situations
(b) low voltage condition in many sections of the grid,
(c) unofficial load shedding during peak hours during summer time,
(d) absence of adequate spinning reserve.
(e) Local interruptions due to line or substation constraints or defects in certain
sections of the network.
(f) some of industries reverting back to the grid supply and across the board an increase
of 6% per annum, and the additional capacity needed works out to 4358 MW and if an annual
growth of 7% is assumed the requirement would go up to 5257 MW. In case the requirement is
based on GDP: Power elasticity applicable to the Indian context, the capacity addition
will have to be much more.
- All the above excercises presume that T&D loses will be
brought down from the present level of 26% to 14% in the course of ten years, through
massive investments.
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