The Karnataka Government is considering taking legal action against the Lanco Infratech-owned Udupi Power (UPCL) if it does not recommence power generation at its 1,200mw thermal plant in coastal Karnataka.
Since June 14, the private developer has stopped generation citing lack of money to buy coal. Its two 600-mw units are fired on Indonesian coal, and they generate 25-26 million units a day at 85% plant load factor. “We have cleared their bills from time to time, and had even released an advance of Rs. 200 crore. I don’t know where ` they spent that money. Now they have stopped generation all of a sudden,” said Karnataka’s Energy Minister DK Shivakumar.
If the firm continued with the shutdown, then the government will release a notice and take action as per the law, he added.
Lanco Infratech, the listed infrastructure developer which owns UPCL, is controllered by L Lagadapati Madhusudhan Rao, the Andhra Pradesh born businessman, and brother of former Congress MP L Rajagopal.
According to Independent analysts, its Lanco which will end up suffering the most due to no generation of power as it will lose out on fixed costs as well. This will affect its operational expenses and debt servicing.
Karnataka, this month had an energy demand between 141 and 163 million units, and Lanco’s Udupi units can meet a sixth of the State’s demand at the current levels of consumption.
“It would have caused us big inconvenience but, fortunately, about 1000mw of wind power is available to us due to the onset of wind season. This has mitigated the crisis,” Shivakumar said.
The Udupi Power Corporation and the five governments owned electricity supply companies (Escoms) in Karnataka have been exchange blows each other at the regulatory forums for three years now making claims and counterclaims.
Each side has accused the other of breaking a promise on obligations. Lanco commissioned its first 600-mw plant near Mangalore in November 2010 and the second plant of the same capacity in August 2012.
The Escoms were paying a tariff of Rs. 3.127 per unit for Unit I with `Rs 1.15 per unit unfixed costs at ` til August 2012.
Lanco has taken the stand that the revised charge for Unit I is applicable from the date of commissioning of the plant. The Escoms have rejected that.
“They are making inflated claims. We will, of course, release some money now. The issue is however, before the courts (regulator),” the Energy Minister said.