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Mangalore Power May Sell Electricity Directly To Bulk Consumers

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BUSINESS STANDARD
Last Updated : Aug 07 2001 | 12:00 AM IST

Mangalore Power Company (MPC), the joint venture between the Hong Kong-based China Light & Power and Tata Power, is planning to sell electricity directly to bulk consumers in Karnataka.

The company has zeroed in on this option in an attempt to circumvent the escrow capacity problem in Karnataka.

A senior Tata Power executive said: "That is one of the options we are looking at. No final decision has been made on this issue."

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Mangalore Power is setting up a 1,000 mw coal-based power plant in the state. The project almost ran aground after the US-based Cogentrix announced its exit in December 1999, but soon found new promoters in Tata Power and China Power, who decided to hike their stake.

Tata Power executives sketched out three scenarios on its new options: first, if the state electricity board is unable to pay for the power purchased then MPC could sell directly to bulk consumers.

Secondly, it could be an alternative to the escrow mechanism. In which case, instead of selling power to the board it would sell directly to the consumers.

This possibility Tata Power executives pointed is contingent on the Electricity Bill 2001 being ratified by Parliament.

The Electricity Bill 2001 is at present being discussed by various experts and envisages direct sale of power to bulk consumers.

Incidentally, a committee headed by Deepak Parekh, chairman of the Housing Development and Finance Corporation has estimated that Karnataka has no escrow capacity.

At present, the Karnataka Electricity Board has been unbundled and corporatised into three entities. Two of these will generate power, while the third entity, Karnataka Power Transmission Corporation (KPTCL), will focus on transmission and distribution.

The Karnataka government has already taken an in principle decision to privatise distribution in the state.

"The third scenario is that these reforms proceed as scheduled and power distribution is privatised. In this case, we will sell power directly to the distribution companies and not KPTCL," Tata Power executives said.

The 1,000 mw Mangalore power project has been hanging fire for a long time. It was one of the original fast track power projects and was promised a counter guarantee from the Union government which is yet to materialise.

The original promoter Cogentrix walked out of the project citing undue delays. Subsequently, it was taken over by China Light which was Cogentrix's minority partner in the project. Later on, China Light entered into an MoU with Tata Electric Companies (now Tata Power) for picking up a 30 per cent stake.

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First Published: Aug 07 2001 | 12:00 AM IST

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