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KSEB creates fresh hurdles for Kannur power project

D Jose in Thiruvananthapuram

The fate of the 513 MW Kannur Power Project, promoted by KPP Nambiar and Associates, continues to be uncertain even after the withdrawal of Enron International in August this year from the controversial venture.

Though the ruling Communist Party of India-Marxist had maintained that it was only opposed to Enron's participation in the project, the government has so far not recommended it for the final techno-economic clearance by the Central Electricity Authority two months after the US multinational pulled out.

The Kannur power project is vital in terms of meeting the power shortage anticipated by the government in the coming years. As per the 15th power survey of the Kerala State Electricity Board, the state's peak load power requirement in the year 2002-03 would be around 4300 MW. The state is not expected to have this much power by the year 2003 even if all the ongoing projects are completed.

The Kannur project, which had got most other clearances while Enron was still associated with it, now needs only the techno-economic clearance of the CEA.

The Kannur Power Project Limited Chairman K P P Nambiar's hopes that the project would automatically get the nod after Enron's withdrawal, were shattered when the Kerala State Electricity Board put fresh hurdles in the way of a final clearance.

The KSEB board, which met here last week, deferred the recommendation by drawing a comparison between the Kannur project and another project proposed by a Malaysian company at Kochi. Several members on the board argued against Nambiar's project saying its cost was higher compared to the Kochi project proposed by the Malaysian-based Siasin Trade and Services Limited.

Nambiar believes the comparison is not fair since his project is naphtha-based, while the Kochi project is a gas-based one. He told redff.com that the Siasin project costs were higher than that of the Kannur project when they had both bid for the fuel linkage. KPPL had beaten Siasin in terms of cost at that stage and got the fuel linkage.

The KPPL has also slashed down its project cost by Rs 1 billion recently to peg the final cost at Rs 14.7 billion.

The KSEB's attempt to draw a parallel between the KPPL and the Siasin projects lacks conviction because the latter's prospects are linked to establishment of a an LNG terminal at Kochi. The LNG project is still in its embryonic stage and no one knows whether it would take off the ground.

If Siasin does not get the gas connection, the company will have switch to naphtha as the fuel. As per the agreement, Siasin will have to find an alternate fuel in case it does not get the LNG linkage and absorb the losses suffered in the process.

None of these factors, however, have deterred the KSEB from recommending a techno-economic clearance for the Siasin project.

Under these circumstances, many in the state think that the Siasin project is an unviable proposition. The Kannur project, on the other hand, is all set to take off. It has already got the required fuel linkage and its promoters have identified a foreign partner to replace Enron

Highly placed sources said that a powerful lobby in the ruling CPI-M is trying to scuttle the project. The idea is to delay the project beyond a reasonable time so that Nambiar would be forced to pack up.

Nambiar, however, is not likely to give up so easily. "I have time till 2005 to complete the project. I will complete it before the deadline, come what may," he said.

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