JOIN USBriefing reporters after the Cabinet meeting, Higher Education V S Acharya said the power plant, which will use liquefied natural gas (LNG) from the Dabhol Gas pipeline would be ready to coincide with the completion of the 800-km pipeline to transport gas from the LNG terminal in Dabhol to Bidadi near Bangalore two years hence.
The power plant, estimated to cost Rs 3,700 crore and to be commissioned by the Karnataka Power Corporation Ltd (KPCL) will provide dedicated power to Bangalore City, Acharya said.
The government will bear up to Rs 450 crore in terms of “idle cost” till the completion of the project, Acharya added.
The KPCL has proposed to downscale the project from 1,400 MW to 700 MW, apprehending the fluctuating rates of liquified natural gas in the global market and anticipating delay in laying the pipeline from Dabhol to Bidadi by Gas Authority of India Ltd (GAIL).
The KPCL had acquired 178 acres in central Bidadi for what was originally a 2,100-MW project, which was downscaled to 1,400 MW and now has been further downgraded to 700MW.
Officials say that presently cost of production of a unit of electricity produced by gas fluctuates between Rs eight and Rs nine per unit, and volatility of prices over the next three years makes it unpredictable to have long-term cost estimates.
Downscaling of the project has been proposed to the government, because of the risks involved, officials added.
KPCL has also shelved the long term linkage concept, and has decided, once the plant is commissioned, to tender for the fuel as and when necessary. Officials say that it’s best to observe the rates once every two months, and then bid when the rates are the lowest.
If the rate is fixed now itself, then the Corporation would bear heavy losses, they added.
The KPCL would, however, like to spike the project altogether. Officials say that gas-based power project is costlier than the solar energy harnessed.
The maximum spent on thermal energy is Rs 6 per unit, making the Bidadi project more of a white elephant.