Power producers have called upon Union Ministry of Power to rope in Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) to provide funds for smooth implementation of emission control systems (ECS) in thermal power plants.

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This was necessitated following the reluctance of banks and financial institutions to fund, citing the prevalent stress in the sector and exhaustion of their lending limits to the power sector.

Besides, banks and financial institutions have indicated that the environment norms were notified after the commissioning of the plants, and therefore they were not part of the earlier approved financing plans. Thermal Power Plants (TPPs) are required to install and upgrade various ECS as per the phasing plan finalised by Central Electricity Authority (CEA) to comply with the environment norms notified by the enviroment ministry on December 7, 2015.

Association of Power Producers (APP) in its missive to the power secretary Ajay Kumar Bhalla on October 11 has said as per the estimates by CEA additional financing worth Rs 500 crore will be needed for a 1,000 mw plant for the installation of ECS. However, banks and financial institutions have asked TPP operators to approach the power and environment ministries to seek equity or alternatively soft loan.

APP director general Ashok Khurana told DNA Money, ''In view of the criticality of the matter, the power ministry has been requested to take up the issue with REC and PFC to see if they can be designated for funding the debt component of this proposed expenditure, or alternatively to convince the banks to ease restrictions of lending for the installation of ECS.''

He said as per CEA calculations, there will be a tariff increase of 9 paise per unit for upgradation of electrostatic precipitators, 32 paise per unit for the installation of Flue-gas desulfurization (FGD) and 7 paisa per unit for Nitrogen Oxide emissions control. ''Therefore, on completion of the respective ECS, the applicable increase should be allowed as ''Ad-hoc additional tariff'' from the date of installation of the system. In case the Ad-hoc tariff will be more than the adjudicated tariff by the Central Electricity Regulatory Commission (CERC) and the State Electricity Regulatory Commissions (SERCs), then the thermal power plants (TPP) would be liable to refund the additional amount with interest,'' he said.

Khurana said APP has requested the power ministry to consider its suggestion of Ad hoc tariff for inclusion in the Tariff Policy to provide legal backing for the same.

Further, APP has appealed the power ministry to issue instructions to CEA not to insist on routing the approval process for feasibility studies and detailed project reports for installation of ECS through CERC and SERCs. Instead, CEA should scrutinise and approve the feasibility studies and detailed project reports on its own, it said.

According to Khurana, unless these key financial and regulatory issues are addressed on a priority basis, TPPs would continue to face challenges in the smooth implementation of ECS.

CLEAN AIR

  • As per CEA calculations, there will be a tariff increase of 9 paise per unit for upgradation of electrostatic precipitators, 32 paise per unit for the installation of FGD and 7 paise per unit for nitrogen oxide emissions control  
  • Banks and financial institutions are reluctant to fund due to stress in the sector and exhaustion of lending limits to fund power sector