Having queued up in big numbers to set up mini hydel power projects with a view to making good money by leveraging the government incentives, and later feeling the pinch of the lowest plant load factor due to drying up of the irrigation canals, the Small Hydro Power Developers Association has sought the government's help to tide over the critical situation.
Of the total number of 38 mini hydel power stations with an aggregate capacity of 80.25 mw in the state, 31 are on Nagarjunasagar Right and Left canals and most of them could not generate power for the last 16 months as there was no water flow in those canals due to poor monsoons and increase in the capacities of the upstream reservoirs in Karnataka.
As a result, all the mini hydel power projects put together in the state could generate only 56.85 million units (mu) of power in 2002-03 as compared to 202 mu in the preceding year.
"With the lowest PLF, we are unable to sustain repayment of interest and principal installments. We would have become NPAs for financial institutions, but for the revised schedule given by Ireda. We really didn't expect this kind of bad scenario. Add to this, the government has been changing its policies making our operations unviable," said G Chowdaraiah, the president of the association.
"While the government initially allowed third party sale of power, it was subsequently banned. Similarly, the state irrigation department has proposed a steep hike in water rate for non-consumptive use of water for hydel power generation," he said.
"APTransco on its part also hiked wheeling charges from 2 per cent in kind to 28.4 per cent in kind and 50 paise in cash per unit. (However, it is now pending before the Supreme Court). All these changes coupled with lowest PLF have changed the very economics of mini hydel power plants," he explained.
At a PLF of 40 per cent, the association claims that the cost of power generation including 16 per cent rate of return on equity works out to Rs 3.80 per unit for mini hydel power plants.
As per the union ministry of non-conventional energy sources, APTransco is paying Rs 3.48 per unit during the current year. This has become a major issue in view of the high cost of mini hydel power and as the current policy comes for review by the end of current fiscal.
"Although our price is much higher when compared to the purchase price of power from other sources (which is at below Rs 2 level), the purchase price from mini hydels would be the cheapest after the loan repayment period of 7 to 10 years," Chowdaraiah said.
"This can be enjoyed for about 50 years. Keeping this in mind, we proposed to sign long-term purchase agreements with APTransco. Karanataka state has already done this," he said.
The association proposes to submit a detailed report on this to APERC and APTransco.
The association also submitted a memorandum to the state government, urging it not to charge any water rate on the water used for power generation since it is non-consumptive in nature.
For many years, the royalty on non-consumptive use of water for power generation was 1.5 paise per unit of power.
However, with effect from April 2003, the state irrigation department increased it to 28.5 paise per unit for the first 5 years of the hydel plant's operation and 57 paise per unit for the next 5 years and 85.5 paise per unit after that.
"We hope, the state government will consider our request for exemption of water rate for hydel power generation", Chowdaraiah said.