Amid Punjab government exploring options to buy Rajpura-based Nabha Thermal Plant, which is being run by Larsen and Toubro (L&T), power engineers in the state have written to CM Amarinder Singh arguing that it would be a loss-making deal that would burden the state exchequer. The firm had a few days ago offered to sell the plant to the government at Rs. 10,000 crore.
The private thermal plants and their Power Purchase Agreements (PPAs) are a controversial issue in the state as the government has to pay fixed charges to the private power plants as sustenance allowance even when the electricity is not drawn from them.
The government is considering buying the plant stating that it would not have to pay the fixed cost to the plant and it will become the state’s asset.
In a letter to the CM, Amarinder Singh, president of PSEB Engineers Association Jasvir Singh Dhiman and general secretary Ajay Pal Singh Atwal, have stated that the firm has claimed an “exaggerated” initial cost of Rs. 10,000 crore for 1,400 MW capacity thermal plant and that too after having received Rs. 8,000 crore on account of capacity charges (known as fixed cost in common parlance) from PSPCL since commissioning in 2014.
“The claimed amount is still Rs. 9,690 crore (Rs. 2,688 crore as equity and Rs. 7,002 crore as outstanding debt as on June 30). If Rajpura Thermal is acquired at Rs. 10,000 crore then considering 9 per cent annual interest on loan, the estimated additional burden to PSPCL over the balance period of PPA is likely to be Rs. 7,000 crore to Rs. 7500 crore. This additional burden will further increase if annual interest on loan is more than 9 per cent.”
The engineers have stated that the contemporary plants in other states were much cheaper when set up. “Rajiv Gandhi Thermal Power Project (RGTPP), Khedar, Hisar (2×600 MW) awarded in 2005 for an estimated cost of Rs. 4,512 crore at Rs. 3.19 Cr per MW, CLP Jhajjar (2×600 MW) was awarded at a cost of Rs. 5,700 crore at Rs. 4.32 crore per MW during around the same time when L&T was awarded Rajpura Thermal Plant whose per MW cost ought to be lower being a higher capacity unit of 700 MW each. The plant is in operation for more than 6 years and a substantial part of capital cost has also been recovered. A reasonable depreciated value of this plant needs to be considered,” the engineers have said.
The engineers have also stated that in future cheaper solar power would be available and coal-fired plants would not be advisable. “The Nabha power plant has been awarded at a quoted net Station Heat Rate (SHR) of 2,268 kCal/ kWH at busbar. However, from the inputs we got from our sources, IPP is not able to achieve the quoted heat rate and the net SHR of the plant is above 2,300 kCal/ kWH. As even minor variation in SHR has huge monetary implications so exact value of present SHR needs to be ascertained. For this, SHR test should be carried out from a reputed third party and price should be suitably reduced if tested net SHR at busbar is more than 2268 kCal/ kWH. The actual heat rate at part load also needs to be kept in view as the plant shall run on partial load due to wide variation in state power demand between day and night particularly during non paddy season of about 8 months.”
The fact that the unit has already run for more than six years has prompted the engineers to say that the possibility of wear and tear may not be ruled out. The health of the equipment and the plant too needs to be ascertained, the engineers have stated.
The engineers association has added that they had forewarned the government against adverse effects of privatisation of the power sector and had had given its professional advice to the state government to develop at least one power plant in the state sector instead of offering both the new thermal plants at Talwandi and Rajpura to the private sector.
“However, the state government in its own wisdom overlooked the professional advice. In fulfilment of our bounden duty, we are giving another advice to ensure that Punjab consumers are not at disadvantage as had happened earlier at the time of signing of PPAs with private thermal plants at Rajpura and Talwandi Sabo,” the letter to the CM said.
