JSW Energy, which is currently operating its Rajasthan power plant on a lower ad hoc rate, hopes to get a higher rate in the next six months. At present, its power is being sold at Rs 3.35 per unit, but the company wants a tariff of around Rs 4.50-4.80 per unit.
The company is operating four units with a capacity of 500 Mw in Barmer district. The lignite-based power plant is based on a fixed cost recovery model. JSW says they are unable to recover all of its fixed costs with the current rate. “We are unable to recover the entire return on equity. We can recover our interest, entire fixed cost and some portion of depreciation,” N K Jain, vice-chairman of JSW Energy told Business Standard.
The state power regulator will have to study the entire project cost, and fix a rate based on that. Such projects have an average return on equity of 16 per cent as directed by Central Electricity Regulatory Commission. The returns can get higher if the project can achieve higher plant load factors (PLF), as incentives are given for better capacity utilisations. Specially for lignite, which is a low-grade fuel, there are extra incentives at lower plant utilisations.
“At present, the regulator has not finalised the rate. Once the regulator determines the final rate then retrospectively, it is a matter of time before we would recover with return on equity,” said Jain.
JSW has already synchronised the fifth unit of the power plant, and is expected to complete the entire 1,000 Mw power plant by the second quarter of this year.
The project was also allocated two lignite mines, and has started production from the mine. Last year, they mined between 1.6 to 1.7 million tonnes from Kapurdi mine. They are allowed to mine around three million tonnes per annum from this mine. Even though they are allowed to mine around four million tonnes from the second mine at Jalipa, they are to possess the land required for that.
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Besides, the company seeks government approval to mine higher volume of coal from the Karpudi mine.
“We are requesting the government if we can mine 6-7 million tonne from the Karpudi mine. Then it would be sufficient for all the eight units. And, in the next one to two years, we would also operate the Jalipa mine,” said Jain.