The Hindu : Andhra Pradesh News : Rosaiah shows red flag to pipeline power projects

Online edition of India's National Newspaper
Saturday, Aug 14, 2004

Andhra Pradesh

Andhra Pradesh

Rosaiah shows red flag to pipeline power projects

By Our Special Correspondent

HYDERABAD, AUG. 13. The Government has said it will not allow a further increase in the installed capacity of four gas-based pipeline power projects, adding that it is not obliged to secure gas linkage for the extra capacity.

If the pipelines' developers wanted to create extra capacities, they should do it "at their own cost and risk." Getting gas allocation for the enhanced capacity would also be "their lookout," the Finance Minister, K. Rosaiah, who also handles the energy portfolio, announced at a press conference here on Friday.

`Mistake in press note'

He denied having assured Vemagiri that he would allow an increase in its capacity over the 370 MW mentioned in the Power Purchase Agreement (PPA) or help secure gas linkage from the Gas Authority of India Limited for the extra capacity.

These offers figured in the press note issued recently by the Principal Secretary, Energy, D. K. Panwar, following the Chief Minister, Y. S. Rajasekhara Reddy's discussions with Vemagiri representatives, "by mistake," the Minister said.

Vemagiri's offer

Mr. Rosaiah said Vemagiri was asked to defer the completion of the project by a year and accordingly the plant could declare itself available to the grid by November 2007, not earlier. Toeing the Government line, Vemagiri offered not to use naptha as alternative fuel for a year after the completion due to non-availability of natural gas, and has also promised not to claim fixed charges for this period if the plant remained idle due to non-availability of gas.

Accordingly, the word "naptha," a costly fuel, was removed from the Vemagiri PPA, he said.

The Finance Minister made it clear that serious efforts were being made to apply these measures to the other three pipeline projects - Konaseema (445 MW), Guathami (464 MW) and GVK Extension (220 MW - with a view to rectifying their PPAs and thus reducing the burden on consumers.

He said Vemagiri had sought capacity enhancement saying it would get incentives from the Union Government if it rose to 1,000 MW.

Mr. Rosaiah, however, said it was "moral and legal" for GAIL to supply gas according to approved capacities.

Ball in GAIL's court

The situation would be "catastrophic" if it failed to do so; the Government would be made to pay for the delay or short supply, he said. It would also review the PPAs of the existing four projects, GVK, Lanco, BSES and Spectrum.

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