Image showing a thermal power plant. For representational purposes.
Credit: iStock Photo
Bengaluru: The central government’s decision to change the mandate on the installation of flue gas desulfurization (FGD) systems at thermal power plants has left projects in the state close to Rs 3,500 crore in limbo.
So far, Karnataka has awarded tenders worth Rs 3,430 crore for introducing FGD systems at three thermal power plants.
However, many of them were still in the initial stages of implementation and the central government’s decision not to make it mandatory might impact the progress.
Given that it is capital-intensive, both termination and continuation of the projects could have a direct impact on power purchase costs in the state.
The capital spent on such projects is directly reflected in the accounts and as a result, the power tariff could go up. If terminated, the money spent so far could be termed as unwanted expenditure.
“The capital costs spent on any project are recorded as investments and details of the same are submitted to the Karnataka Electricity Regulatory Commission. If the project costs come down or it is terminated midway, it could be considered as a reduction in costs during annual tariff revision and as a result, the power purchase costs might come down marginally,” a senior Karnataka Power Corporation Limited (KPCL) official explained.
The state energy department has sought advice from the Central Electricity Authority (CEA) on the future course of action.
“Since our projects are ongoing, it is not clear what we should do. Hence, we have written to CEA, seeking its views. Based on the response, we will take a call,” Gaurav Gupta, additional chief secretary (energy), told DH.
However, senior KPTCL officials said that the terms and conditions of the tenders had to be carefully examined before taking a decision since termination of the tender midway could also prove to be expensive for the department.
At the Raichur Thermal Power Station (RTPS), the energy department has awarded the project at an estimated cost of Rs 801.25 crore. The project was awarded in August 2020. Similarly, at Bellary Thermal Power Station (BTPS), the project was awarded in March 2024, at a cost of Rs 1,837.19 crore. At the Yeramarus Thermal Power Station (YTPS), the project was awarded in August 2020 at a cost of Rs 792.23 crore.
In 2015, the central government made the installation of FGD systems mandatory at all thermal plants in the country, aiming to cut down on sulfur dioxide emissions.
However, on July 11 this year, the government revised the policy, saying 78% of the thermal plants in the country would be exempted from the mandate.
All three thermal plants in the state fall under category ‘C’ and hence, are exempted from mandatory installation of FGD systems.