Should UPCL be closed down…?

By Philip Mudartha, Qatar
Bellevision Media Network

Doha, 14 March 2011: The farmers in villages around Udupi Power Corporation Limited (UPCL) are aggrieved. Their soil, water, and air are polluted. Their traditional livelihood is threatened. The yields and incomes from agriculture, floriculture and horticulture are dwindling, which they ascribe to damage to local environment. The damage is ascribed to fly ash, bottom ash, effluent water, particulate and obnoxious chimney gas emissions.

 

 

The grievances are legitimate and therefore require genuine solutions. Solutions embedded in total quality management system would be sustainable and address their current and future concerns. Therefore, it is prudent to examine the issues entirely, in both historical, political and technical backgrounds. I will do this in separate parts, beginning with history of the project.

 

For decades, the chorus has been the lack of development at village, block, district and state level. The coastal belt hardly saw any industrial development. This was attributed to power shortage and  undeveloped infrastructure mostly poor sea, rail and road linkages. Load shedding was routine. Even with the absence of heavy industries, existing water pumps in the agricultural sector and households had to go without power for long hours. Establishing of power station was a longstanding demand of the region since the early eighties. A long struggle ensued for realizing this demand.

 

In 1987, Karnataka Power Corporation Limited (KPCL) proposed to set up a 2x210 MW coal-based thermal power plant at Nandikur near Padubidri. KPCL carried out preliminary project work such as surveys, environment studies etc. However,  local opposition killed its hopes.

 

In 1989, National Thermal Power Corporation (NTPC) proposed its 2x210 MW capacity plant at the same place in collaboration with Soviet Union, with final capacity pegged at 2,420 MW. Litigations and disintegration of Soviet Union killed the initiative. 
After NTPC backed out, the state government invited private parties to invest in power project. Cogentrix of USA and Lanco Infratech Limited (Lanco Group) submitted bids and were allotted 1,000 MW each by 1996.

 

 

Lanco Group formed UPCL as a wholly owned subsidiary to own and execute the project  and took possession of state allocated land in Yellur by 1999. However, Cogentrix was frustrated by prolonged litigations, local opposition and consequent delays. By 2010, UPCL completed erection of 2x600MW plants and commissioned the first unit. In early 2011, Lanco Group is reported to have finalized project plans and secured approvals for doubling the generation capacity with two more units of 660MW each on the land acquired for Cogentrix project. If this project is completed by 2020, the mega power plant will produce 2520MW, realizing 1989-dream after three decades. Surely, it will bring in new challenges, opportunities and grievances.

 

Will this dream come true? Is Lanco Group capable to execute the project? From its track records, it sure should. It is a diversified infrastructure development company with its Corporate Office in Gurgaon, Haryana. It is a publicly listed Indian company and last traded price on National Stock Exchange (NSE) is Rs36.55. It  incorporated UPCL as a wholly owned subsidiary with the financial structure of 20% equity and 80% debt. The debt is arranged through a consortium of 14 major banks led by Power Finance Corporation. Therefore, most of the invested money has come from the general public. How much of our money has been invested?

 

The original project cost for 2x600 units was 4320 crores of rupees, but UPCL has so far spent 5689 crores. The plants are yet to reach the designed capacities. They have to address process issues, safety risks, health hazards, environment impacts. They have to receive full consent to operate (CTO) with necessary certifications per global norms. ISO9000:2008, ISO20000:2004 and OSHA18000 are minimal HSEQ certifications required. When full 1200MW power is uploaded to the national grid, the expenditure migth reach 6000 crores. This does not include the money Karnataka Power Transmission Corporation Ltd (KPTCL) has to invest for the establishment of a 400Kva line to evacuate the power into the national power distribution network.

 

 

With the commencement nominal production of 55W out of planned 600MW from the first unit of UPCL on 3 June 2010, this  decade’s long struggle finally came to end. Six months later, the generation is reportedly 500MW. This is because KPTCL operates its 210Kva line only.  The 400Kva line is not yet installed. The second unit is ready but can commission only after KPTCL can evacuate the power under the Power Purchase Agreement (PPA) signed in 2005.

 

The estimated investment for the 1320MW second phase is 6930 crores of rupees Once again, money that belongs to you and me. And should it go to waste, if the local opposition steamrolls into shutting down the plants under ’UPCL hatao Andolan"?