Mahagenco’s 6 power units went 6,207cr over budget

Nagpur: The final project cost of Maharashtra State Power Generation Company Limited's (Mahagenco) six new units at Koradi, Chandrapur and Parli thermal power stations (TPS) has gone up a whopping Rs6,207.66 crore. Technically, the escalated cost alone could have funded another 1,182MW generation capacity.

The project cost was revealed recently when Mahagenco filed a petition with Maharashtra Electricity Regulatory Authority (MERC), seeking approval of the capital cost and tariff determination of the six units — 8, 9 and 10 of Koradi TPS, 8 and 9 of Chandrapur TPS, and 8 of Parli TPS. MERC has asked Mahagenco to invite suggestions and objections on the petition by October 23, for which Mahagenco issued a public notice on Friday.

The petition in MERC mentions that total capital cost of three units of Koradi TPS with installed generation capacity of 1,980MW is Rs14,821.82 crore. The cost was Rs11,880 crore when approved in October 2008. Thus, the cost has escalated by Rs2,941.82 crore.

The capital cost of TPS units of Chandrapur TPS is given as Rs7,794.97 crore whereas approved cost was Rs5,500 crore in March 2008. This cost has escalated by Rs2,294.97 crore.

The cost of Parli TPS unit, Rs2,345.87 crore, is close to double the approved cost of Rs1,375 crore in May 2009, an escalation of Rs970.87 crore.

Power activist Pratap Hogade told TOI that the cost of all units is well above the norms of Central Electricity Regulatory Authority (CERC). "Each unit should come up at maximum cost of Rs5.25 crore per MW as per CERC. Capital cost of Parli TPS is Rs9.38 crore per MW while it is Rs7.79 crore for Chandrapur TPS, and Rs7.48 crore for Koradi TPS. MERC should not approve costs above CERC norms," he said.

Going by the CERC norm, Mahagenco could have added new units with capacity of 1,182MW in the escalated cost.

Hogade added that tariff of these units will come to Rs4.50-5.50 per unit after addition of fixed cost charges. "Power is available at Rs3-3.15 per unit from many other sources. The higher cost power will add to the burden on power consumers. They are already paying much higher power tariff due to the apathy, improper planning and extra expense of Mahagenco and MSEDCL. This is going to have a big impact on power tariff," he said.

Hogade also said capital cost of these units is excluding land and infrastructure cost. "Many projects get delayed or face cost escalation due to land acquisition. But all these units were developed on Mahagenco's available land. How could there be such high escalation?" he questioned.

Justifying the escalation, Mahagenco director (projects) Vikas Jaideo said there were many reasons behind delays. "Major reason was private companies faced financial crisis due to delay in disbursement of loan from banks. There were also problems in material supply. Works could not happen during rainy season. Almost all power projects are delayed and face cost escalation. All these were giant projects, so it is not a big issue if the cost escalated," he said.