The Karnataka government has approved the proposal of Karnataka Power Corporation Limited (KPCL), the state-owned power generator, to procure liquefied natural gas (LNG) for the first block of its proposed 700 Mw Bidadi Combined Cycle Power Plant (BCCP) through a 100 per cent on spot market basis from Gas Authority of India Limited (GAIL).
The KPCL will execute a gas transmission agreement (GTA) with GAIL in the due course. As per the agreement reached between KPCL and GAIL recently, the KPCL agreed to lease 2 acres and 6 guntas of land for a period of 15 years at a lease rent of Rs 100 per acre per annum against which KPCL would be exempted from termination payment and bank guarantee to GAIL, the state government said in an official notification recently.
The KPCL has proposed to take up the 1x700 Mw power project at Bidadi, about 32 km from here at an estimated cost of Rs 3,750 crore. It has acquired 70 hectares at Bidadi for the project.
The entire power generated from the project will be allocated to the Bangalore Electricity Supply Company (Bescom) as the plant is near the load centre which could accommodate the requirement of peak load.
The infrastructure development department, government of Karnataka, signed an MoU with GAIL on April 29, 2009, to facilitate the smooth implementation of the pipeline projects with an anchor load of Bidadi CCPP. The gas is expected to flow to Bidadi by 2012-end, the government had earlier announced.
According to a recent government order, the KPC Bidadi Power Corporation Limited (KPBCL) and GAIL shall enter into a MoU for lease of the land to an extent of 2 acres and 6 guntas. The company can accept the stipulation of GAIL for ship-or-pay level at 95 per cent, as per the draft Gas Transmission Agreement.
Also Read
The government has also approved KPCL to accept the proposal of GAIL for providing the Letter of Credit covering three fortnights as per the draft gas transmission agreement.
The KPCL can also incorporate the interest rate at SBI Base rate plus 6.25 per cent per annum in the gas transmission agreement, wherever applicable.
The state government has also guaranteed KPCL that if the power plant is not operated due to high cost of gas resulting in high cost of power, it would give around Rs 480 crore per year to service the debt of Rs 3,712 crore. Similarly, GAIL transmission charges of Rs 226 crore per year will be paid.
The state government has also agreed to support the Karnataka Power Corporation Limited to an approximate extent of Rs 706 crore per annum, besides providing guarantee for the debt, if required.
The chief secretary of Karnataka has been authorised to resolve any disputes that may arise between KPCL and GAIL in the future.