BSES Kerala Power Yet To See Light At End Of The Tunnel

Kochi, November 24: | Updated: Nov 25 2002, 05:30am hrs
Amidst talks of trifurcation of the Kerala State Electricity Board (KSEB), the states first fast-track power project appears to be in for a permanent shut down, following the boards indifference. The final closure of BSES Kerala Power Ltd (BKPL) appears imminent when the IDBI was likely to finally put the locks on the plant after December 31 when the bankers move for NPA recovery.

According to sources in BKPL, talks with the board have failed. Despite frequent promises of restarting operations after the plant was closed down over a year ago in mid-October 2001 and the board proposing to take up with the Central Electricity Authority (CEA) the issue of the over Rs 210 crore it owes BKPL, nothing had been conveyed to the company, managing director SMC Pillai told FE.

KSEB had announced that 180 mw power from NTPC would be sold to Tamil Nadu via Theni and on a displacement basis the board could purchase power from BKPL. However, no official information was received by BKPL, he added.

After December 31, it was certain that the consortium of banks led by the Canara Bank would move the authorities for refund of their loans. Already the banks had sought a status report on the project sometime ago. In such circumstances, there was no way but for the IDBI to step in and then would begin the process of winding up the project, selling off the assets and finally repaying the loans.

The 165-mw combined cycle project, a joint venture of Mumbai-based BSES Ltd and Kerala State Industrial Development Corporation (Ksidc), had entailed an investment of Rs 540 crore and the cost had now gone up to Rs 622 crore, the sources added.

Of the total investment, BKPL raised Rs 337 as terms loans and Rs 131 crore from the BSES Infrastructure Fund, a BSES subsidiary. KSIDC has a stake of Rs 17 crore in the project with an equity base of Rs 127 crore, the bulk being held by the parent company. The total exposure now stood at Rs 278 crore. An amount of Rs 132 crore alone was to be spent on loan servicing to have been got from the fixed charges of Rs 212 crore from the board at the rate of Rs 10.6 crore monthly, Mr Pillai said. The project had received only Rs 129 crore from the KSEB towards oil purchase.

The parent company BSES Ltd had decided in April that no more would it pump money into the project. It had already given Rs 100 crore to service the loans. Mr Pillai said that it was the high naphtha price that had pushed the power cost up. In the present conditions a unit of power would cost Rs 3.40 and this was much less than the cost of power from NTPC. The power purchase agreement (PPA) was signed in 1999 with KSEB and an escrow account opened with the SBT. However no collection was deposited as the board had not issued necessary orders to this effect, Mr Pillai said. The SEB was yet to issue the commercial entry certificate. About the move for shifting operations outside the state, Mr Pillai said it would be a difficult process. Sources in BKPL said the company could take legal recourse. However, this was what the board would prefer so that it could shift the responsibility of decision-making to the court and the issue could be dragged on. Mr Pillai admitted that there were offers from several companies in the vicinity to draw power form the plant. Though the SEB was informed of this, it was yet to come back to BKPL on the issue.