NLC India Limited (NLCIL), which has shelved the seven-year-old 3,960 MW Sirkazhi thermal power project in Nagapattinam district, has assured the Tamil Nadu government that it will implement a couple of thermal power projects of 3,440 MW capacity in Neyveli and Thoothukudi to neutralise the possible loss of investment.
The 61-year-old power utility, which comes under the administrative control of the Union Coal Ministry, has planned to set up four units of 660 MW each as part of the second expansion of the Thermal Power Station-II (TPS-II) in Neyveli, about 200 km south of Chennai. Locally available lignite would have been the fuel.
The TPS-II has an installed capacity of 1,470 MW, and the TPS-II expansion 500 MW. Besides, a 800-MW coal-fired unit will also be established in Thoothukudi through NLC-Tamil Nadu Power Ltd (NTPL), a special purpose vehicle floated to execute a plant of 1,000 MW.
With regard to renewable energy, the NLCIL has drawn up plans for solar power projects of 1,339 MW and wind power projects of 500 MW, all in Tamil Nadu.
If all the plans fructify, the installed capacity of the projects, both in the areas of conventional and renewable energy, will be around 5,300 MW, according to sources in the State government and the power utility.
Originally, the NLCIL had decided to install in Sirkazhi 1,980 MW (in the first phase) at a cost of Rs. 10,395 crore. A director of the company says the details regarding the project cost were revisited, and on scrutiny, it was found that electricity generated from a pithead power plant, even after taking into account wheeling charges, would be cheaper compared to the proposed Sirkazhi plant.
The Central authorities have allotted coal from Talabira–II & III blocks in Odisha for the project. In case NLCIL had stuck to its plans on the Sirkazhi project, coal would have been transported over a distance of 1,650 km by road, rail and sea. In Talabira, five units of 800 MW each, totaling 4,000 MW, will be put up and this will be called the Odisha Pit Head Thermal Power Project.
An official of the State government says the per unit cost from the Sirkazhi plant will at least be around Rs. 5.5 against about Rs. 3 per unit in the case of the pithead project.
“Essentially, it is for the reason of cost that the State government has given its consent to the NLCIL’s move to scrap the Sirkazhi project.”
Land acquisition is another major factor that has gone against the project. Nearly 1,200 acres are required, and the government had even given its nod for the acquisition.
Another government official says there would have been stiff opposition to any move to acquire land, as the area forms part of agriculturally intense Cauvery delta. Since new rules under the 2013 law on land acquisition would have been applied, the project cost would have gone up further, the official says, acknowledging that Sirkazhi should not have been chosen at all for the project.