BANGALORE, Dec 25: The Kudremukh Iron Ore Company Ltd (KIOCL) has signed a power purchase agreement (PPA) with Globetrotters Engineering Corporation of the USA to set up a 60 MW captive power plant within the company's premises at Kudremukh in Karnataka.

Company chairman and managing director S Murari told The Financial Express that the plant would take care of about 75 per cent of the company's power requirements at Kudremukh.

He added that the PPA signed last week entitled the Globetrotters to set up the plant on a build-own-operate-maintain (BOOM) basis and has a built-in penalty clause which compels the company to commence generation of power within 20 months beginning January 1, 1998.

Globetrotters is floating the bid for erection procurement and construction of the plant. The company has several such power projects to its credit in various parts of the world.

KIOCL has been facing severe power shortage at Kudremukh which is a highly automated set up. According to Murari, the company's expenditure on fuel and power has recorded a consistent increase with tariff levels going up to the tune of 33 per cent. The company had to bear the burden of an additional expenditure of almost Rs 5 crore per month during the current fiscal owing to this increase.

Until the power plant becomes a reality, there is no scope for improvement in the production of iron ore concentrate, which is one of two most important exports and revenue generating products of the company.

The plant at Kudremukh will make available uninterrupted power supply of a minimum of 45 MW and thus enable uninterrupted operations of at least two productions lines at all times, he added.

Murari further pointed out that the company had achieved an improvement in iron ore pellet production at its facility in Mangalore owing to the installation of two DG sets of 9.6 MW each. A third DG set is also likely to be installed at the premises shortly.

In order to effectively utilise any temporary surplus power that may be accrue from the DG sets from time to time, KIOCL has entered into banking and wheeling charges with the Karnataka State Electricity Board (KSEB) recently. This will entitle the latter to evacuate and wheel the additional power generated to its grid located near Mangalore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.