The Hindu : Government policy on power purchase flayed

Online edition of India's National Newspaper
Friday, Mar 26, 2004

Andhra Pradesh

Andhra Pradesh

Government policy on power purchase flayed

By Our Special Correspondent

HYDERABAD, MARCH 25. Protesting against frequent changes in the Government policy and withdrawal of some incentives as assured in 1998, Biomass Energy Developers' Association has appealed to the Government and the Andhra Pradesh Electricity Regulatory Commission (APERC) to continue with prevailing power purchase price of Rs. 3.48 per unit as against the new price of Rs. 2.40 per unit at 100 per cent PLF (Pay Load Factor) effective from April 1.

Addressing a press conference on Thursday, U. Veerendra Kumar, secretary, and other office- bearers of the association, said 30 units which had come up investing Rs. 800 crores cannot survive and would have no option but to shut down as they would not be able to even repay loan if the price was at Rs. 2.40 per unit.

While stating that they would file a review petition before the APERC, they also appealed to the Government and Non-Conventional Energy Development Corporation of Andhra Pradesh (NEDCAP) to take over the 30 units (by returning their investment) and run them profitably if they can based on the new price structure. The 30 units had the capacity to generate about 170 MW.

They claimed NEDCAP invited investors to set up biomass power plants in the State in 1996-97, offering incentives like third party sales (at Rs.4 per unit) with 2 per cent wheeling or Rs. 2.25 per unit for sale to APTransco with 5 per cent escalation every year with 1994-95 as base year. These conditions were for a 20-year period.

However, after they set up units, APERC came into existence and cut some of the incentives like 2 per cent wheeling charges and third party sale. The price of biomass fuels like rice husk had gone up from Rs. 200 per ton to Rs.1500 per ton in the past three years. Cost of production of biomass power was higher when compared to conventional plants, they said.

After two years, now APERC reduced price to Rs. 2.40 per unit (effective April 1), and linked it to PLF, which was not done anywhere in the country (for small units like biomass power plants), they claimed. They also protested against the variable cost fixation for five years.

Observing that the industry was meted out injustice and the policies were killing the industry, they said biomass-based units would have no option but to `shut down' if the Government does not react to their appeals.

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