The Hindu : Andhra Pradesh / Hyderabad News : More `power' burden likely

Online edition of India's National Newspaper
Wednesday, Apr 25, 2007
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Andhra Pradesh

Andhra Pradesh - Hyderabad

More `power' burden likely

Special Correspondent

Sequel to refusal by private power projects to toe Government line

HYDERABAD: Threat of an additional burden of Rs. 460 crores is looming large over power consumers in the State following the refusal by two private power projects to toe the Government's line.

The gas-based projects of Vemagiri (370 MW), GVK Extension (220 MW), Gauthami (464 MW) and Konaseema 445 MW) are ready for operation but they are being kept idle for want of gas. They have been asked not to use naptha, a costly fuel, as an alternative to natural gas.

Following discussions with the Government, the promoters of Vemagiri and Konaseema projects, however, offered to delete the clause in their Power Purchase Agreements (PPA) that provided for claiming fixed charges from power utilities without generating power when the plant is shut due to non-supply of gas or restriction not to use naptha.

Accordingly, Vemagiri changed its PPA and the same was approved by the AP Electricity Regulatory Commission. Konaseema followed suit but the change in its PPA is yet to be cleared by the commission.

Meanwhile, the promoters of GVK Extension and Gauthami have rejected the Government proposal to delete the clause and instead, petitioned to the High Court seeking supply of gas for 18 weeks for trial run much to the chagrin of the AP Transco.

The High Court issued an interim order directing the GAIL to ensure gas supply to them and the Transco to provide the necessary connectivity to enable them to start the test run and evacuate the power generated during the test.

AP Transco, however, filed a petition against the order. The Transco officials fear that these projects, after successful tests, will declare themselves as available for commercial operation.

Once this declaration is made, the utility has to pay fixed charges as per the PPAs even if there is no generation due to lack of natural gas.

The fixed costs payable annually to the two projects under the circumstances will work out to Rs. 460 crores. By deleting the "alternative fuel clause" from the PPAs of the Vemagiri and Konaseema, an annual burden of Rs. 560 crores has been avoided.

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Andhra Pradesh