The Karnataka government has accorded approval to the Karnataka Power Corporation Limited (KPCL) to execute the long-pending Bidadi Combined Cycle Power Plant (BCCPP) using Liquefied Natural Gas (LNG) as fuel. The government recently approved procurement of LNG from the Gas Authority of India Limited (GAIL) or Indian Oil Corporation Ltd or any other agency on the spot market basis.
KPCL has proposed to take up the 1x700 Mw power project at Bidadi, about 32 kms from here at an estimated cost of Rs 3,750 crore. It has acquired 70 hectares at Bidadi for the project.
The LNG would be sourced from the spot market as the long-term contract involves higher risk and works out expensive for the first block of 1x700 Mw with plus or minus 20 per cent, a government order issued in this regard said.
Presently, LNG prices are hovering around $9-10 per MMBTU on the spot market. On long-term basis, the prices are ranging between $18 and $19 per MMBTU.
The entire power generated from this project will be allocated to Bangalore Electricity Supply Company (Bescom) since the plant is near the load centre, which could accommodate the requirement of peak load.
The infrastructure development department, government of Karnataka has signed a 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 into Bidadi by 2012-end.
A committee, headed by chief secretary, had decided to lower the capacity of the project from 1,400 Mw to 700 Mw as it was not affordable to procure gas for the full capacity due to the high tariff to the consumers of the state. It is planned to procure LNG from GAIL up to an extant of 50 per cent quantity (350 Mw) on medium term contract of 5-7 years with take or pay and supply or pay obligation and the balance 50 per cent on a spot market basis.
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If the medium term contract becomes unreasonably costly, LNG can be purchased 100 per cent on a spot market basis to meet the 700 Mw generation, the committee recommended.
The board of KPCL has accepted the recommendations of the committee in principle and decided to authorize the sub committee to discuss further with GAIL regarding the modalities of gas procurement and transportation to the project site.
Considering the reduction in capacity to 700 Mw, the government has also asked the KPCL to cancel the existing techno-commercial and price bids for the 1,400 Mw EPC tender of the BCCPP and invite fresh offers from the existing nine pre-qualified bidders for the EPC works.
“If the power plant is not operated due to the high cost of gas, resulting in the high cost of power, then around Rs 480 crore per year will be given to the KPCL to service the debt of Rs 3,712 crore. Similarly, GAIL transmission charges of Rs 226 crore per year will be paid,” the government said in its order.
Since, BCCPP is near to the load centre, which reduces the transmission loss to the power sector of the state in the range of 3 per cent 3.5 per cent compared to the present transmission loss of the state, which is around 4 per cent.