Energy-starved Karnataka has deferred a decision on purchasing power from cogeneration sugar mills in the state.
The government, which had bought 300 Mw of power from sugar mills at a special tariff of Rs 6.50 per unit during January to May last year, has rejected the mills’ demand for the continuation of the same price this year, according to official sources.
At a meeting between state energy minister K S Eshwarappa and representatives of sugar mills recently, the government failed to arrive at a consensus on the tariff for power to be supplied by cogen sugar mills this year. While the mills demanded the continuation of last year’s tariff of Rs 6.50 per unit, the state energy minister rejected the demand.
It is said, chief minister B S Yeddyurappa will take the final decision on the matter later this week. The government sources said the Karnataka Power Transmission Corporation Limited has been asked to work out the requirement for power to be purchased from sugar mills and other private generators for the present summer season.
“We have asked for the same tariff this year. It would not be feasible for us to accept anything below Rs 5.50 per unit given the cost of generating the power,” sugar industry sources said.
The sugar mills had asked the Karnataka Electricity Regulatory Commission (KERC) to fix Rs 7.78 per unit for the next five years. However, KERC in its order of December 11, 2009, has fixed Rs 3.59-4.14 per unit for new cogen units.
There are 34 cogen sugar mills in the state with a combined capacity to generate 732.24 Mw of power. After meeting their internal power requirements, these mills are left with an exportable surplus of up to 459 Mw. Around 14 sugar mills have entered into a power purchase agreement with the government and are presently supplying power in the price range of Rs 2.80-4.66 per unit, while the remaining 20 units supply power under open access.
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During January 2009, the state government had invoked Section 11 of the Electricity Act 2003 and directed cogen units to supply power only to the state grid and had fixed a special tariff of Rs 6.50 per unit between January and May 2009.
Sugar industry sources said the mills have invested close to Rs 5.5 crore per mega watt of power and hence they cannot supply power below Rs 5.50 per unit. Presently, the cost of bagasse in the open market works out to Rs 2,500 per tonne, while the government has estimated it at Rs 1,020 per tonne and fixed the power tariff at Rs 3.59 per unit for the new cogen units.
At the meeting, the energy secretary suggested that those cogen mills which are under PPA will continue to supply power at Rs 2.80-4.66 per unit and those units that are under open access system can supply power at their choice, the sources said.
Meanwhile, the chief minister is expected to take a decision on this matter sometime during this week, the sources added.