Independent Power Producers (IPPs) in Orissa may have to bear the cost of national grid transmission charges for providing electricity to the state, as Grid Corporation of Orissa (Gridco) has objected to pay these charges.
In a recent meeting, Gridco officials pointed out that since private power producers have the option to connect with the state grid, the state-owned utility should not pay for charges of transmission made through Power Grid Corporation of India Ltd (PGCIL) network.
“The IPPs have been mandated to sell a fraction of their power production to the state as per the agreement. They want to supply power using PGCIL grid, for which we would have to pay. Why should the state pay more for the power which is produced here?,” asked B P Mohapatra, director of finance of Gridco.
The state has signed Memorandum of Understanding (MoU) with 26 private power producers to generate thermal power close to 40,000 Mw. Of these, 12 companies have been mandated to contribute 25 per cent of the total production to state.
In the second phase agreements, the IPPs were told to give 12.5 per cent to 14 per cent of their production at variable prices depending upon prevailing coal rates.
The power producers are reluctant to use Orissa Power Transmission Corporation Ltd (POPTCL) lines to supply to the state and want to use the central network to sell power all over the country through open access system. Even some of them have paid to PGCIL to construct grid lines near their plants, feeling that connecting to state grid would not be commercially viable, sources said.
The generators have also refused to dedicate one of their units to state grid saying in case of power production failure in that particular plant, the private producers will have to supply power from other units, which otherwise would have been connected to central grid.
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As an alternative, Gridco has suggested that it can buy total power from three or four IPPs towards its overall share, instead of buying fraction of power from each generator. However, under this option, the supplying companies would have all of their units dedicated to state grid.
The government officials said Gridco managing director has given the IPPs two weeks time to think about the transmission plan.
It is unlikely that IPPs will agree with the second option given the profitable business option for selling through central grid.
Gridco has already filed a case before the Orissa Electricity Regulatory Commission (OERC) saying it should not pay for the transmission charges. The commission is likely to give its mandate by the end of this month.
Private producers such as Jindal Steel and Power Ltd (JSPL), GMR and Ind Bharat are scheduled to start power production by May this year while others are in different stages of construction.