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Tata power co ltd says it will shut its Mumbai situated 500 megawatt (MW) unit at its 1,580MW Trombay power plant if it is not able to convert the gas/oil fuelled unit into coal-fired one.
Installed capacity of Tata Power's Trombay power plant 1,580MW situated in Mumbai's Eastern suburb, the particular unit with a capacity of 500MW was built in the mid-1980s to run either on gas or oil. Since gas is not available, this unit is run on oil only when there is a sudden spurt in demand. The cost of fuel conversion in the plant is around INR 11740 Million. The cost of power generation from diesel varies between INR 12 and INR 15 a unit while coal-fired power is available at INR 3.50-5 a unit.
Supreme Court in 2008 ruled that Tata Power has licence to distribute power for retail consumers in the Mumbai suburban license area. Tata Power has been engaged in pitched battles with Reliance Infrastructure Ltd (R-Infra) to win over retail consumers.
Maharashtra Electricity Regulatory Commission (MERC) imposing cross-subsidy surcharge on consumers who get supply from Tata Power but are served through R-Infra's distribution network have made its power costly. On the other hand, MERC recently reduced average tariff for R-Infra by 12% from fiscal 2015.
Company has given the application for fuel change in December 2012 to the ministry of environment and forest. They are currently reviewing the company's application seeking clearance for change in fuel. environmental groups have been opposing this conversion as they fear it will further pollute the Eastern suburbs of the city that already have two state-run oil refineries and one fertilizer plant.
In such a scenario, it will make sense for Tata Power to switch from costly gas and oil to cheaper coal based unit.
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