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Sunday, February 7, 1999

TNEB rules out third party sale of power by captive power plant 

Our Bureau  
Chennai, Feb 5: Tamil Nadu Electricity Board (TNEB) chairman, M B Pranesh has categorically ruled out any possibility of the state allowing direct third party sale by captive power producers. He was addressing a seminar on `Captive Power Projects in Tamil Nadu' organised by the Confederation of Indian Industry (CII) in Chennai.

He said that if such a move is allowed, cream of TNEB's customers especially major industries will be lost. About 40 per cent of TNEB's power is sold to industries but in terms of realisation the share of the industry is expected to be more than 60 per cent if one is to consider cross subsidisation on account of free supply to farmers to the extent of 28 per cent of its generation and the subsidised tariff that is offered to domestic consumers. If the cream of the industries move away, then the escowable capacity of TNEB will further be weakened.

Presently, Tamil Nadu government allows setting up of captive power plants (CPPs) and has also framed a policy on captive generation. Thepolicy does not allow third party sale as in Maharashtra except under circumstances where TNEB is unable to purchase the committed amount from the captive power producer. Even there the rider is that the third party sale cannot be at a price less than what TNEB supplies through the grid.

Pranesh said that the state would be having power deficit till 2002 and the quickest solution to the demand-supply gap is the captive power generation. By 2002 the independent power producers who have been given escrow cover and are in the various stages of financial closure are expected to start feeding power to the grid thereby bridging the supply gap.

He also said that the government would review the policy on an yearly basis to decide whether CPPs should be allowed to come up. On the Rs 2.25 per unit tariff fixed for supply of power by CPPs, Pranesh said that the tariff has been fixed on the basic premise that CPPs are only addition to the existing business conducted by the industry and not a stand alone one. Hencethe tariff structure does not take into account the type of fuel, interest costs etc. He added that the tariff has been fixed considering the average realisation for the power sold by TNEB and also considering those offered by other states.

TNEB has also recommended to the state government that the generation tax of 15 to 30 per cent for those producers generating power using furnace oil be scrapped. The government is yet to take a decision on it. TNEB officials also said that they were open to any suggestions on the wheeling charge and the board is yet to examine the request of reduction in charges made by various producers.

Earlier, K Vasudevan, chairman, CII Task Force on Power said that the draft report of the committee is ready and the final report would be submitted to the Tamil Nadu chief minister by end March. He said that captive power plants apart from easing demand for power would also relieve pressure on TNEB on the escrow front. Cost of power generated by CPPs are lower than that of IPPs andas they are located near the user industry the T&D losses are minimal.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.


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