Nalco bats for 'open access' in power trading

By : BS Reporter
Last Updated: Sat, Jan 05, 2013 06:43 hrs
A worker walks through an aluminium ingots depot in Wuxi

National Aluminum Company (Nalco), a navratna firm under Union ministry of mines, has pitched for allowing open access' norms in power trading in Odisha.

"It was a paradoxical situation that when power was available in the exchanges at Rs two per unit, Nalco was curtailing aluminium production for want of power. Under the circumstances, permission of open access for purchase of power by industry offers a viable alternative," said Anshuman Das, acting chairman-cum-managing Director (CMD) of Nalco at the Invest Odisha' seminar here.

Open access norm in a power transmission network enables industrial buyers to procure electricity from different distribution companies, including private power generators at a negotiated and competitive price.

The state energy department is still undecided over allowing open access, as it fears losses in revenue generation.

In November 2011, the Union power ministry had asked all state governments to implement open access norms in power marketing and distribution to bring in competition in the market, which is dominated by debt-ridden distribution companies (discoms), mostly run by state governments and in few states, by private companies.

"Open access to CPPs (captive power plants) will facilitate availability of more electrical energy in the market and help containing prices," Das said. Nalco's net profit had nosedived to just Rs 5 crore in the second quarter of the current fiscal against Rs 139 crore in the same quarter of 2011-12. The sharp dip in profit was attributed to disruption in power production at its captive power plant, which forced the company to use costlier imported coal and high cost emergency power from the state grid, which increased net operating cost by Rs 149 crore during the quarter.

Power cost plays an important role in aluminium production as it comprises 35 per cent of total cost of the metal output. Most aluminium makers, therefore, depend upon own power plants to reduce the costs.

Besides producing power for industrial use, CPPs also sell additional power to state grid during sufficient availability of coal in summer and yet buy costly emergency power from state in case of poor fuel supply during rainy season. Nalco suggested allowing power banking among CPPs and state grid to tide over the difficult times.

"If we can develop a mechanism for power banking then the CPPs would export excess energy to the state grid during the dry months (summer) and import the same quantity of electrical energy in the monsoon months," Das proposed.

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