Power Outages Forcing Firms To Reconsider Investment Plans In T G

[Gajji_maraja]

HYDERABAD: Frequent and long power outages are forcing industries based in Telangana to reconsider their proposed incremental investments, expansions and greenfield projects in India's newest state. 

Telangana chief minister K Chandrasekhar Rao has blamed N Chandrababu Naidu, the chief minister of Andhra Pradesh, for the power woes of his state. Andhra Pradesh, from which Telangana was carved out on June 2, owns over 60% of the two states' combined power generation assets of 16,465MW in terms of location. 

While Rao has sought three years to fully resolve the power crisis, industry leaders say they cannot afford to miss out on the overall improvement in business sentiment in the rest of the country. 

"The situation on the ground is more alarming since power cuts to the industry are much more than 24 hours a week in reality," said a cement manufacturer with a large facility in Nalgonda district of Telangana. The Andhra Pradesh Reorganisation Act of 2014 stipulates division of power plants among the successor states based on their geographical location. Telangana later secured nearly 54% power allocation based on the consumption track record formula through a contentious government order in April, two months after the Parliament passed the Act. 

At a time when Andhra Pradesh is supplying uninterrupted power across sectors, Telangana has im posed 4-12 hours of daily power cuts on farmers and domestic consumers, and four-day-amonth production holiday on industries. Against a demand of 161 million units (mu) a day , the Telangana government is able to supply only 137mu. 

Besides, the state is unable to buy electricity from power-surplus states because of grid connectivity issues. "We are bleeding as we are operating our units on diesel generator sets to meet the delivery schedules promised to our clients," said the chief executive of a foundry on the outskirts of Hyderabad. "The state government power agencies are neither ensuring uninterrupted power supply nor allowing us to buy power from mar ket through open access." 

The industry agrees that the decades-old power supply issue cannot be resolved overnight by a government that has been in office just for 100 days, but it wants the government to spell out mediumand long-term plans to address the problem,said K Sudheer Reddy, president of Telangana Industrialists' Federation. 

"Operating the units on diesel generator sets is turning unviable and most of the power-intensive and continuous process industrial units like foundries around the capital city are suffering huge loss es and are on the verge of closure," said Reddy. 

"In the interest of promoting industrialisation in the new state and attracting fresh investments, the government should immediately clear hurdles before the industry to buy power in the market through an open access mode, apart from assured power in the mediumto long-term." 

Nrupender Rao, vice-chairman of CII's Telangana unit and chairman of Pennar group, said, "Approvals for open access is taking time. I am sure the processes can be improved and simplified, so that the time taken for giving approvals to open access agreements can be cut short." The CEO of a listed drug maker said, "If the Telangana government does not address the power crisis on a war footing, then it could stand to lose out on the current advantage of well-heeled infrastructure in Hyderabad. We will have to look at moving incremental investments out of Hyderabad." 

The power-surplus neighbouring state of Andhra Pradesh, thanks to generous support from the NDA, could soon catch up with Telangana on infrastructure and end up having greater advantages in attracting investments, he added." But CII's Rao does not buy this argument. 
 

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