The Hindu : TBPC awaiting KPTCL move on PPA

Online edition of India's National Newspaper
Thursday, Jun 26, 2003

Southern States

Southern States - Karnataka-Bangalore

TBPC awaiting KPTCL move on PPA

By Our Staff Reporter

BANGALORE June 25. Officials of the GMR Group, promoters of Tanir Bavi Power Company (TBPC), are waiting for an "indication" from the Karnataka Power Transmission Corporation Ltd. (KPTCL) to extend their power purchase agreement (PPA).

The Managing Director of TBPC, B.V. Nageswara Rao, told presspersons here on Wednesday that the existing seven-year PPA for the barge-mounted 220-MW plant off the Mangalore coast would end in November 2008. "The KPTCL needs a mandate from its board to extend the PPA for another seven years or so. Besides, we also need to discuss it with our lenders," he said, and pointed out that they would rework the existing PPA and "definitely" include an escrow mechanism in the new one.

Mr. Rao and the Vice-President (Strategic Planning) of GMR Infrastructure, P.Chakrapani, reiterated that the arbitrators' recent decision to award four cents per kW-hour as fixed charges to the TBPC vindicated the company's stand. "We are not, as KPTCL has said, getting anything excess. It is legally ours," they said. It may be recalled that experts such as Ranganathan of the Indian Institute of Management, Bangalore, had criticised the TBPC PPA as "too confusing". On Wednesday, Mr. Chakrapani stressed that the PPA was clear on what the fixed charges and variable costs were. "There is no confusion," he said.

According to him, the fixed charges comprised one component attached to a moving dollar rate and the other linked to a fixed dollar rate.

The KPTCL had agreed to this when the PPA was signed, he stressed. Though the TBPC could work on gas and not just naphtha as it did now, Mr. Chakrapani ruled out any fuel change. "Though gas will be cheaper now, there is a move in the market to make its price on a par with oil prices. So, in about four years, prices will double".

Naphtha prices, he said, went through a yearly high and low, ranging from Rs. 9,000 per tonne to Rs. 12,000 to Rs. 13,000 per tonne. The TBPC tariff had come down by 78 paise in recent months because of the fall in naphtha prices, he pointed out. Both he and Mr. Rao said many States had to chart their power project plans keeping different fuel options in mind. Karnataka could not simply depend on coal or hydel sources anymore, they added.

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