The recent decision of the State Government to go in for power from the Ennore LNG project has generated a feeling in the state that the Kannur project has been put in the back burner.

The statement by Union minister Murli Manohar Joshi last week in Thiruvananthapuram that a lot of money has changed hands in making the State Government decide to sideline the Kannur project, has added fuel to the controversy.

While a section in the CPM has come out in favour of the Kannur project, another has made it clear that it will be suicidal for the State to go ahead with the naphtha-run plant when power will be available at a cheaper rate from Ennore.

Way back in February 1995, the State came into an agreement with Mr Nambiar for the project and the power purchase agreement (PPA) was signed in March 1996. The project got clearance in 1997 end.

But things started going against the project when Mr Nambiar included Enron as a major participant in the project. This earned the wrath of the CPM which had through its labour arm, CITU, raised a storm against Enron in Maharashtra.

The CITU lobby in the party had an upper hand and sent clear signals that Enron's participation in the project was not acceptable. The MNC bogey was raised against Enron then and Chief Minister EK Nayanar, who had till then said that ``even the devil was welcome to bring power to the state'', turned against Enron participation in the project.

Mr Nambiar climbed down and the project got the Central Electricity Authority's technical clearance in 1999. Mr Nambiar then proposed to the government his intention to involve US company El Passo in the project. On August 23, 2000, the Kerala State Electricity Board okayed the participation of El Passo.

Things took a sudden twist around the time Prime Minister AB Vajpayee was to visit the US early this month. Among the three power proposals to be presented at the Indo-US summit was Kannur Power, besides the Ennore and Hirma projects.

On September 6, the Union power ministry joint secretary was purportedly informed over the phone by State power minister S Sarma that the state government was interested in buying 200 mw power from the Ennore project.

This is said to have kept the Kannur project out of Mr Vajpayee's purview during the US visit, sending signals that the state was no longer interested in the Kannur project.

Though Mr Sarma denied that he had informed the Centre about his government's intention of not going ahead with the Kannur power, he has repeatedly said the state intended purchasing power through the national grid from Ennore as it would cost a mere Rs 2 per unit.

The State power secretary had last month made it clear to the Centre that it was not interested in the power from Ennore though he was party to the KSEB meeting that decided on August 23 to buy power from Ennore. KSEB said power generated at Kannur would be costly.

It has clarified that naphtha-based power will cost Rs 4.65 per unit though Nambiar claims it will be a mere Rs 2.78.

CITU leader E Balanandan has argued that power from Ennore will cost Rs 2.44 per unit. Fuel cost of a naphtha-based plant would be Rs 3.44 per unit.

Fixed cost of Rs 1.21 added to this will mean Rs 4.65, he points out.The statement by the power minister and the KSEB that there would be a shortage of 200-odd mw by 2003 makes it all the more important that the State go in for power from Ennore, he argues.

It has to be noted that if the State agrees to buy power at a plant load factor (PLF) of 80 per cent, it would have to buy more than its requirement of 200-odd mw from the 513-mw Kannur project.

The whole opposition to the project now stems from the issue whether the state can afford to buy power at an exorbitant rate. When the world over naphtha projects are being rejected, petty political survival instincts seem be gaining an upper hand on the issue.

If the Chief Minister and the CPM state secretary, who was the power minister when the Kannur project was conceived, argue that the state needs the project just because they belong to that area, the vital issue whether the state needs all this costly power and will industries come up in enough numbers to consume that power, is totally eclipsed.