HYDERABAD: The GAIL and the ONGC were admonished by the Electricity Regulatory Commission (ERC) at its hearing here on Thursday on the power purchase agreements of the four upcoming projects - GVK Extension, Konaseema, Gouthami and Vemagiri.

Commission Chairman K. Swaminathan expressed his unhappiness to the counsel of these public sector undertakings for attending the hearing for a second time without information about their plans of gas supply to the projects.

He reminded them that the hearing that was held on November 5 had to be postponed as they had failed to provide the details.

He grilled the counsel for not filling the questionnaire furnished by the commission. When GAIL counsel said that he had received the document only a few days ago and sought four more weeks to reply, Mr. Swaminatham angrily remarked that the paper was faxed on November 17 and the same was confirmed. He postponed the hearing to December 31.

The real issue

The issue before the commission has a serious bearing on consumers. The Government signed power purchase agreements (PPAs) with the developers of four projects when the ONGC/GAIL gave a firm commitment to supply gas to them. However, the undertakings later pleaded shortage.

These projects have switched over to alternative fuel, naptha, and claimed a higher variable cost. The overall price of power to be purchased from them would have gone up to Rs. 5 per unit. But the Government averted this situation by persuading the developers to keep the "alternative fuel clause" in abeyance till January 2007. As a result, the developers are likely to postpone their commercial operation till that time.

The AP Transco, however, petitioned the commission for deletion of the clause for the entire 15-year period of the PPAs. If this is not done, consumers will have to shell down Rs. 1,020 crores per annum to the developers through AP Transco if `naptha' is used.

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