K'patnam set to become energy hub

Krishnapatnam in Nellore district is all set to become an energy centre on the east coast that can potentially meet the requirements of the coastal industrial corridor being actively promoted by the Andhra government.

The port town is expected to house close to 10,000 Mw thermal power projects both in public and private sectors, a little less than the existing installed capacity of the state, in the next 5-6 years.

While the state-owned Andhra Pradesh Industrial Infrastructure Corporation (APIIC) is gearing up to provide 3,000 acres of land (no acquisition of private land involved) to the private power projects on the south of Krishnapatnam port, Krishnapatnam Ports Company Limited (KPCL) is planning to develop a 100-mld (million litres per day) desalination plant to meet their water requirements.

The ongoing development of the Krishnapatnam port, one of the three port facilities to be privatised in Andhra, is the main reason for locating these power projects here as they either depend on imported coal from countries like Indonesia or from coalfields in Orissa, which can be brought through the sea route to Krishnapatnam port.

The other important advantage for locating the projects is the availability of seawater for condenser cooling as potable water is a major bottleneck in this region.

Besides the flagship projects --the 4,000-Mw ultra mega power project (UMPP) announced by the Centre and a 1,600-Mw super-critical thermal power project being developed by APGenco on the north of Krishnapatnam port --, private players including the KPCL have proposed to develop close to 4,000 Mw capacity in coal-based thermal power. The prominent among them include the two projects each with 540 mw capacity by the Malaxmi Group-promoted Simhapuri Power Limited and Meenakshi Power company promoted by the Devineni Suresh of Care Hospitals Group, and a 1,000-Mw project proposed by the KPCL itself.

Y Harish Chandra Prasad, promoter of Malaxmi Group, said the company would go ahead with the project as soon as it gets the land. According to him, the APIIC is expected to provide the land at the rate of 0.8 acre per Mw to the private projects.

Confirming that the KPCL's plans also include a power project, Colonel SB Puri, director, Navayuga Engineering Company Limited, said the proposal was currently in the initial stages. NEC holds 74 per cent equity in the KPCL.

Among the overseas firms, Dubai-based engineering, construction and trading group, ETA, is actively considering to set up a power project with an ultimate capacity of 1,000 Mw, state government officials said.

While all these are recent proposals, old ones too are expected to be reactivated as it was based on their coal requirement and iron ore export potential that the development of the port has been taken up.

It may be recalled that the GVK Group and BBI Power had entered into power purchase agreements (PPAs) with the state to set up two coal-based projects with 520 mw each at Krishnapatnam. While the fate of BBI's proposal is not immediately known, GVK, however, has not given up the project. "It is not our immediate priority as we have been developing so many other power projects across the country. However, the company has not cancelled the project," Issac George, chief financial officer, GVK Group, told Business Standard.

According to him, procedures like amendment to the old PPA as per the new Central Electricity Regulatory Commission (CERC) guidelines have to be renegotiated with the government before bringing the project on to the front burner.

Meanwhile, the desalination project, the most crucial requirement after the port facility, would be a joint venture between the KPCL and APIIC. "After several rounds of discussions, the government has decided that KPCL will develop the plant while the APIIC will provide land towards equity in the project," BP Acharya, vice-chairman and managing director, APIIC, said.

According to him, a common desalination plant would reduce the cost of water to Rs 45-50 per kilolitre as compared with Rs 60 if taken up on small-scale by these projects.

The proposed desalination project, the detailed project report of which is currently under way, is expected to cost around Rs 600 crore, Puri said. "We will soon call for expression of interest for executing our project," he added. KPCL is looking forward to complete it in around two years. A similar project in Chennai took three years for completion.

The company proposes to enter into MoUs with power companies and other industries for supply of water from the plant though some power developers are keen to have their own captive desalination plants.