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States seek Centre’s funds to meet environmental norms for thermal power plants

Anupam Chatterjee

To meet the additional expenditure required to adhere to the environmental norms for thermal power plants, the states have sought access to the Centre-operated Power System Development Fund and the National Clean Energy Fund. According to sources, many states have demanded that the capital expenditure on this account should be passed on as grants and not considered as loans. The issues were raised at the conference of power ministers of states recently held at Gurgaon.

According to the ministry of environment and forests (MoEF) mandate, 1,61,402 mega watt (MW) power generation capacity would have to install flue gas de-sulphurisation (FGD) units and 64,525 MW capacity will have to be upgraded with electrostatic precipitators to reduce emissions. The estimated capex to install the emission reducing equipment are in the range of Rs 88 lakh to Rs 128 lakh for every MW. This is expected to raise power tariffs by Rs 0.62-0.93/unit. The average price at which power distribution companies (discoms) purchase power is about Rs 3.5/unit.

The state power departments would be wary of any rise in power costs with financial losses of the discoms under the UDAY scheme increasing by 36% year-on-year to Rs 15,080 crore in H1FY19.

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Private power generators, already reeling under stressed assets of about Rs 2 lakh crore, had already flagged the concern in 2018 and requested the power ministry to designate REC and PFC as nodal financing institutions for pollution control equipment. With high exposure and large number of projects on watch list, no bank is willing to lend more money to developers, Ashok Khurana, director-general, association of power producers, had told FE.

Analysts estimate that about 17 GW of power plants will have to be decommissioned as they would not meet the emission norms within the deadline, mainly due to lack of space to accommodate the new systems.

The FGD installation drive is seen to open up a Rs 1.3-lakh-crore opportunity for companies such as BHEL, L&T and GE Power which provide emissions control equipment. State-owned power generation behemoth NTPC would install FGDs in 63.2 GW of compatible power stations. Out of this, it has already awarded contracts for 32 GW and 28 GW are under various stages of tendering.