Bangalore, Nov 27: The union ministry of power is offering an option to all independent power producers (IPPs) in the country to change from white band fuel to black band fuel or blended fuel if their fuel supply agreements (FSA) are not yet in place. Revealing this here on Tuesday advisor to ministry of petroleum & natural gas A Bhattacharya said that this option will be open for two weeks anytime after the closing of the current financial year.

He further said that though the ministry has already given this option between August 21 and September 5 earlier this year, no IPPs had come forward to awail of it.

Bhattacharya was delivering a special address clarifying the latest ammendment in the FSA at a two day seminar, ``Industrial Power Crisis : Captive Power Limitations v/s IPP Alternatives'', organised by the Independent Power Producers Association of India (IPPAI).

In response to a query on the lack of options for liquid fuel in the absence of infrastructure suitable for import of naphtha, Bhattacharya said that a third category: ``condensate''is also being encouraged. This alternative also has the same infrastructure and transport problems as naphtha and is also a class A explosive and therefore difficult to transport.

But this fuel, though cheaper, carries an import duty of 30 per cent which makes it just as expensive as naphtha.

Bhattacharya further said that a task force has been set up by the ministry of petroleum, with representation from banks and the Reserve Bank, to set up a hedging mechanism for naphtha pricing. Naphtha will have a fixed price for a period of 10-15 years and the IPPs will have to pay a premium for price certainty.

This option will only be available to IPPs purchasing naphtha through national oil companies.

On the issue of quality of fuel supplied, Bhattacharya said that the model FSA permits a minimum calorific value of 10,200 kilo calories. The latest ammendments in the FSA also state the quality requirements for the trace materials used for liquid fuel. On the issue of diesel as an alternate fuel, Bhattacharya said that import of fuel requires clearance from both the ministry of power and the ministry of commerce because the item is not on the OGL list. He said that diesel is among the last items to be liberalised while dismantling the administrative price mechanism for petroleum products and diesel as an alternate fuel for power projects can only be considered in 2001.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.