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State, power developers reach accord

By M. Malleswara Rao

HYDERABAD, NOV. 6. In a significant development, the Government has arrived at an understanding with the developers of four gas-based power projects, now in the pipeline in East Godavari, to alter some provisions in the power purchase agreements (PPA) which it perceived as "anti-consumer."

A draft agreement incorporating these changes has been sent to the AP Transco by the Government for approval and clearance by the A. P. Electricity Regulatory Commission for clearance.

The four projects are Konaseema (445 MW), Vemagiri (370 MW), Gauthami (464 MW) and GVK Extension (220 MW).

Major saving

By making an amendment relating to alternate fuel, the projects cannot claim fixed charges till January 1, 2007, if they switch over to costlier fuels such as naphtha and "low sulphur heavy stock" on non-availability of natural gas. A Government spokesman said a saving of Rs. 1,024 crores would accrue on this account alone.

The accord does not provide for enhancement of the installed capacities originally. This is a deviation from the Government's earlier stand to allow the enhancement as a concession for postponement of their commissioning by a year.

With this, the plans by Vemagiri and others to increase capacities will go.

The third condition insisted upon by the Government in the agreement and accepted by the developers is that the Transco will pay fixed charges "only on demonstration of output" by the projects after declaring themselves "available to the grid."

This change, in a way, avoids the "deemed generation" benefit under which some existing private plants are getting fixed costs even when they are idle.

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