UPCL likely to double power cost

Government to approach appellate tribunal for electricity against CERC order

As the Udupi Power Corporation Limited (UPCL) is set to change hands, the 1,200MW power generation unit is likely to give a shocker to power consumers in the State.

Going by the Central Electricity Regulatory Commission’s (CERC) order dated February 20, 2014, the State electricity supply companies – Bescom, Mescom, Gescom, Hescom and CESC – will have to shell out anywhere between Rs 4.60 and Rs 4.65 per unit of power, which is more than double the tariff agreed to at the time of the power purchase agreement (PPA) made in 2005 (which was Rs 2.19 per unit).In fact, doubling of the power tariff against the PPA is said to be unheard of in the power industry.

The CERC report states that the total capital cost, including additional capitalisation up to March 31, 2014, works out to Rs 5,956.83 crore, while the IDC (interest during construction), FC (financing charges) and FERV (foreign exchange rate variation) among others included in the project cost claimed is Rs 1,361.73 crore.

The State government owes more than Rs 1,600 crore to the UPCL, of which the Bescom’s share alone is about Rs 800 crore, according to sources in the escoms.The initial capital cost of the project with a capacity of 1015 MW (2 x 507.5 MW) was Rs 4,299.12 crore, which was subsequently increased by Rs 583.85 crore following the enhancement of the capacity from 1015 MW to 1200 MW.

Speaking to Deccan Herald, Udupi Jana Jagruthi Samithi president Vijay Kumar Hegde, who has been keenly following the power tariff moves, said that if the State government does not appeal against the CERC move, then it will have to cough up a whopping Rs 1,500 crore or more to UPCL – which is nothing but a sheer waste of the tax payers’ money – which includes charges of delay in laying the 400-kV line between the UPCL generation point and Shanthigram in Hassan district.

The UPCL claims that though the Unit-II of UPCL (600 MW) was ready for synchronisation and commercial operation during January-February 2011, the same could not be commissioned and declared for commercial operation for want of evacuation facilities, as the 400-kV evacuation line, supposed to be done by the State government, was not ready.

Another interesting aspect is that the UPCL entered into an agreement with the State government on December 26, 2005, for a period of 25 years and the dues mentioned above are only till March 31, 2014. 

“Can you imagine the repercussions during the remaining period till 2030,” asks Hegde.

Ever since the UPCL was set up in 2005, the 1,200-MW unit has been in the news for wrong reasons – be it the fly ash issue, laying of poor quality pipes to the Arabian Sea, the rehabilitation issue or the exorbitant power tariff.

State to appeal

Meanwhile, when contacted, Additional Chief Secretary Ravi Kumar (KPTCL former MD) said the State would approach the appellate tribunal for electricity against the CERC order, including the hike in power tariff, as well as against the UPCL claim, due to the reported delay in laying the 400-kV power line.

In case the Tribunal does not favour the State government, the only option left is to move the Supreme Court.