Fluctuations in international market prices and the delay in securing a firm commitment from the Centre to ensure long-term supply of Liquefied Natural Gas (LNG) are feared to upset the plans for reviving power generation at the Kayamkulam thermal power plant by replacing naphtha with gas.
The 350-MW plant of the National Thermal Power Corporation had to be shut down following the steep increase in naphtha prices. The price of naphtha which stood at Rs.6,000 a tonne when the plant started generation soared to Rs.70,000 a tonne and production had to be stopped.
Discussions for reviving its functioning have gathered momentum and LNG is being considered as the most cost-effective and viable option. Since the State government does not have the mandate to strike international power purchase agreements with gas-rich nations, its development plans are largely dependent on the power procurement plans of the Centre, sources said.
The Kerala State Electricity Board is sourcing power from different generating stations at tariff ranging between Rs.2.5 and Rs.4.5 per unit and it could not aspire to draw power generated at such exorbitant rates, as the burden would have to be passed on to the consumers.
For converting the Kayamkulam plant to LNG, the Centre would have to ensure hassle-free supply of gas at $ 5 per unit. Even after adding up the transportation and other expenses, the plant would be able to provide power at affordable rates to the consumer, sources said.
The crisis gripping the LNG units in different States also is being cited a case in point. Once imported LNG became exorbitant, gas-based projects with a combined generating capacity of 28,000 MW located in Andhra Pradesh, Uttar Pradesh, Delhi and Gujarat, both in the public as well as the private sector, had to be closed down due to fuel scarcity.
The Central government’s efforts to source the gas from the countries rich in natural gas have not attained fruition so far and the LNG units in the country continue to remain closed. The Union government had been attempting to strike a five-year pact with the LNG suppliers for importing the gas, but the suppliers are reported to be reluctant to strike a time-bound pact.
Centre would have to ensure LNG supply at $5 a unit
KSEB sources power at Rs.2.5 and Rs.4.5 a unit
