Telangana Looks To Exit Power Sharing Arrangement With Ap

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Adding a new twist to the interstate power generation dispute between the two Telugu states, Telanganagovernment has decided to forgo its stated share of electricity in APGenco-owned 1,600 mw Krinapatnam power project and informed the same to the Southern Region Load Despatch Center (SRLDC) recently.

While the move looks strange considering the power-deficit status of Telangana, the people in the know said the government has taken a critical view of the entire power sharing arrangement after doing a cost-benefit analysis of the same.

Soon after the bifurcation the power issue turned into a major bone of contention between the two states when AP government turned down the Telangana government's claim over Krishnapatnam project as well as the 1050-mw Hinduja project in Visakhapatnam.

While Telangana argued that these two plants were also part of the arrangement of sharing on 54:46 per centage basis as prescribed by the Central government under the AP Reorganisation Act, 2014, AP said there were no valid power purchase agreements(PPAs) to back these claims.

The first hint of a change in the government thinking came earlier this year when the state chief minister K Chandra Shekhara Rao declared in the assembly that Telangana will not take power from AP in protest of their refusal to share power from Krishnapatnam.

There is an average 50-60 paise per unit difference in cost of power generation between the plants of AP and that of Telangana and the latter would end up paying more if it depends on AP's power for a long time, a senior official of Telangana Genco said while giving out reasons behind the government's move.

Under the sharing arrangement, Telangana has to give 46 per cent of power from its plants to AP while the latter has to give 54 per cent share from its plants to Telangana at a price fixed at their end. The sharing arrangement will increasingly work in favour of AP as it gets cheaper power from Telangana, which is adding substantial capacity in the next couple of years, according to the Telangana officials.

"It is true that the cost of generation is higher for thermal power plants located in AP because of the coal transport costs. The coastal Krishnapatnam plant is designed to use imported coal, which is expensive. Whereas the power plants in Telangana are located closer to the source of coal, that is Singareni Collieries,"K Balaram Reddy, former chairman of the erstwhile AP Electricity Board(APSEB) said.

However, Reddy added that the Telangana power utilities can pool the power and even sell it to other states instead of forgoing their share in AP power plants.

According to an estimate, the supply-demand gap would increase to 2,000 mw from the present 1000 mw in Telangana if the two states decide to end the sharing arrangement.

"As Telangana is adding a substantial capacity, including 2,200 mw by early next year, we would face the problems only in the short term if the state chooses to pull out of the power sharing arrangement. If the government can handle the situation carefully in this intermittent period, the advantage of pulling out of the power pact would far outweigh the short term difficulties," K Raghu, a power sector expert, and the coordinator of the Telangana Electricity Employees Joint Action Committee said.

In addition to buying high cost power from AP plants during their long PPA period, the existing arrangement will also act as a disincentive to go for more capacity addition in Telangana, Raghu argued.

When contacted on the Krishnapatnam issue Telangana State Genco(TS Genco) chairman and managing director D Prabhakar Rao said that AP Discoms had already excluded these plants from power sharing list in their filings to the AP Electricity Regulatory Commission(APERC) earlier this year. "We will follow the government policy on power sharing issue," he said while citing the chief minister's statement made in the assembly.

The Centre had appointed a Central Electricity Authority(CEA)-headed committee to resolve the power sharing issues raised by both the states. Telangna was yet to make its fresh stand officially known to the committee.

 

http://www.business-standard.com/article/economy-policy/telangana-looks-to-exit-power-sharing-arrangement-with-ap-115042101001_1.html

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