The Hindu : Andhra Pradesh News : Consumers to pay more for power?

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Friday, Sep 14, 2007
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Andhra Pradesh

Andhra Pradesh

Consumers to pay more for power?

M. Malleswara Rao

Gas price fixed by GoM

AP Transco likely to shift entire burden to the consumers
Gas-based projects in the State may become white elephants

HYDERABAD: The price fixed by the Group of Ministers for gas extracted by Reliance Industries Limited (RIL) from the Krishna-Godavari basin at $ 4.2 per mmBtu (million British Thermal units) has given a severe jolt to State’s plans to set up several power projects and other industries based on gas.

The additional annual burden caused by this “exorbitant price” has been assessed at over Rs. 800 crore for the four completed power projects that account for a capacity of 1,499 MW.

The Konaseema, Vemagiri, Gauthami and GVK Extension projects have remained idle for over a year for want of gas while Lanco, GVK, Spectrum and Reliance Energy are being run at 40 per cent plant load factor.

No option

AP Transco will have no other option but to shift this entire burden to the consumers.

D. A. Somayajulu, economic advisor to the Government, regretted that the GoM did not provide an opportunity to the State where the RIL gas reserves actually lay, to present its case despite repeated pleas by the Chief Minister.

Push up tariff

According to an assessment, the high price of gas will push up the tariff to around Rs 2.10 per unit from the present average of Rs 1.71. In the process, the gas-based projects are likely to become white elephants.

Already, the 1,000-MW project planned at Karimnagar has been converted into a coal-based plant.

The high price may not, however, deter other industries like steel plants and fertilizers from using gas as fuel as it constitutes only 20 per cent of their production cost.

Gas scarcity

At present, Lanco, Spectrum, GVK Extension and Reliance Energy suffer from gas scarcity in spite of linkage with ONGC/GAIL.

The Government is not sure whether GAIL will permit RIL to use its pipelines to supply gas to these plants. “The picture is uncertain,” says L.V. Subrahmanyam, MD, AP Industrial Infrastructure Corporation.

No help from RIL?

Experts are doubtful if RIL will be in a position at all to help the State as, it had already committed its production of 80 MCMD to different users in line with the Bombay High Court’s directive.

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