Thiruvananthapuram, Kerala: The state government has directed the Kerala State Electricity Board (KSEB) to explore the possibility of purchasing Union government-run PSU National Thermal Power Corporation Limited’s (NTPC) Kayamkulam thermal power plant, which has become a liability for the board, and examine the feasibility of setting up a small modular nuclear plant there.

Research is under way on developing modular plants, and the Union government is also encouraging the establishment of such facilities. KSEB has also asked the government to find a way to exit the agreement with the Kayamkulam plant after three years and appoint a special committee for the purpose. The committee will examine the feasibility of taking over the plant.

The direction comes amid a situation in which the agreement with the thermal plant has had to be renewed repeatedly despite no power being purchased from it. The government has granted permission to extend the agreement, which had run for 30 years, by another three years. Although the government has granted approval, the extension also requires clearance from the Regulatory Commission. KSEB has approached the commission, which will hear the matter on May 23.

KSEB is not purchasing even a single unit of electricity from NTPC’s Kayamkulam plant. Even so, it has been paying Rs 100 crore annually as fixed charges for the past seven years. The agreement had expired in March last year. The contract is being extended with an annual fixed charge of Rs 100 crore after NTPC reportedly warned that it would stop supplying 180 MW of electricity from its Talcher plant at Rs 3.35 per unit if the agreement was not renewed. NTPC had sought a five-year extension.

KSEB argues that even after paying Rs 100 crore annually for the Kayamkulam plant, it still saves Rs 200 crore because electricity from NTPC’s Talcher plant is available at a lower rate. Kerala receives electricity from Talcher as part of Union government’s allocation.

The key question being raised is whether NTPC has the authority to insist on extending the agreement by threatening to withhold Kerala’s share of electricity from Talcher. The Regulatory Commission is expected to examine the matter.

KSEB has placed conditions for renewing the agreement with the Kayamkulam plant. The agreement will automatically end if electricity supply from Talcher is stopped. Within two years, the feasibility of converting the thermal plant to operate using peat gas — generated from decomposed plant matter, including coconut husk — must be explored. KSEB and NTPC must jointly establish a 500 MW battery storage facility at Kayamkulam, and floating solar plants must also be installed in KSEB reservoirs.