Karnataka to Build 2,000-Megawatt Thermal Power Plant in Chhattisgarh

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Researched by Industrial Info Resources (Sugar Land, Texas)--In a bid to find a long-term solution to Karnataka's power crisis, the state government will set up a 2,000-megawatt (MW) pithead thermal power plant in Godhna in Chhattisgarh. Chhattisgarh Chief Minister Raman Singh has in principle agreed to Karnataka Chief Minister B.S. Yeddyurappa's proposal to build the $2.25 billion plant. The plant will be constructed on 2,000 acres of land. The first phase of the project is expected to be completed by late 2012 and will have a capacity of 1,000 MW. Karnataka Power Corporation Limited will be responsible for executing the project, which will be jointly funded by the state government, Karnataka Power and loans from financial institutions.

Karnataka, which lacks natural sources of power like coal and oil, is largely dependent on hydroelectric power and currently faces a power shortage of about 12%. The demand for power in the state is expected to grow 5% annually. The thermal power plant in Raichur is being fed by Singareni Collieries Company Limited (Andhra Pradesh), Mahanadi Coalfields Limited (Orissa) and Western Coalfields Limited (Maharashtra). The Karnataka government's rationale for setting up the plant in another state is that generating power at the source of coal and transporting it to Karnataka's power grid is cheaper than shipping coal to the state's thermal plants. According to official government estimates, the cost of obtaining power from the Chhattisgarh plant would be 5 cents per unit (1 unit = 1 kilowatt-hour) compared with 9 cents, for example, if the coal had to be transported to Raichur. This will add up to savings of $9 billion in 25 years.

The site for the proposed plant is located in the coal-rich district of Janjgir, and is well-connected by road and rail. Water for the plant will come from the Mahanadi River -- this was a major decisive factor in the choice of the site. Yeddyurappa requested Singh's cooperation to ensure smooth water allocation and clearance from the state pollution control board. Karnataka also hopes that Chhattisgarh, as a member-state of the National Coal Allocation Committee, will be able to help in obtaining long-term coal linkages from the South Eastern Coalfields Limited, which operates the coal mines in Chhattisgarh.

According to the proposed memorandum of understanding between the two states, Karnataka will provide 5% of the power generated by the new plant to Chhattisgarh for free. According to the norms in India, the Chhattisgarh State Electricity Board is legally entitled to purchase 30% of the power at a discounted rate. Chhattisgarh, being among the few states in India with a power surplus, has agreed to forego this privilege. The Karnataka Opposition has expressed the apprehension that Chhattisgarh may opt to purchase the entire quota in 2012, when the first phase of the plant is expected to be ready for generation, given the increasing demand for power. However, the government said that these fears are baseless, since the coal-rich state is planning to set up 40 new power plants in the next eight years. Chhattisgarh is currently supplying 100 MW of power to Karnataka as a temporary relief measure.

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