Delay In Thermal Power Projects Spells High Costs For Telangana

Hyderabad: At a time when Chief Minister K Chandrashekhara Rao is assuring all the farmers of electricity connection and power supply in day time, energy experts are wondered how the Telangana government will keep its word as two major power projects are facing National Green Tribunal (NGT) hurdle. The power connections to the farmers alone would cost the government to the tune of Rs600 crore. The State government has already spent over Rs2,400 crore on setting up transformers and substations considering the demand of 10,000MW. Telangana government will have to depend upon power supply from Chhattisgarh as there's delay in thermal power projects. This is likely to result in an additional burden of over Rs 1,050 crore on consumers every year.

1,080-MW Bhadradri and 4,000-MW Yadadri thermal power plants have been put on hold owing to the non-clearance from National green Tribunal. This leaves Telangana to face about 2,000-MW shortage of power. Hence, Telangana will have to continue to buy power from Chhattisgarh at higher cost. The installed capacity of thermal power in Telangana is 2,882MW, but it's at 65 percent load factor.

"The lower load factor can be attributed to power purchase agreements (PPAs) by Telangana government with private producers. Whether the state consumes or not, it'll have to pay to the private producers. That's the reason, backing down of power generation and it's resulting in high cost of power for the state," observes an energy analyst.

TS Genco power cost is Rs4 per unit as against the PPA price is over Rs5 per unit. If the planned thermal power projects are completed by marginal delay, it would be a great relief for the state, but the status PPAs will be a question mark as the government entered into them in haste.4x270 Bhadradri thermal power plants at Manuguru are expected to be operational by the first quarter of 2018 and this is subject to clearance from NGT. The Union Environment Ministry has already given in-principal approval for the plant.

Coming to 4,000-MW Yadadri project at Damaracherla, the appraisal committee of the Union Environment Ministry has sought clarifications on some technical factors and this is further delaying the project. This project requires 6.5tmc water annually. Subsequently, Telangana government has allocated 6.5tmc of water from Krishna river to Yadadri project, but it was questioned by the Environment Ministry, which objected it saying whether this water was from the quantum allocated to the state or not. The ministry further asked about the coal linkage as well.

Rural Electrification Corporation (REC) is funding the 4,400 MW Yadadri power plant at Damarcherla in Nalgonda district with a reduced interest rate. REC has already handed over a cheque for Rs 16,070 Cr towards construction of Yadadri Power Plant to chief minister KCR.

To fulfill KCR's promise to farmers, Telangana government will have to provide three phase power supply for nine hours to agriculture sector and 24 hours to all other consumers. For this, Telangana needs 24,075 MW including 1,000 MW from Chhattisgarh.

Energy analysts foresee that Telangana's deal for 1,000-MW with Chhattisgarh would alone lead to an additional burden of over Rs 1,050 crore on consumers every year. The power purchase agreement runs for 12 years, which would mean a total burden of Rs12,600 crore over the period just on account of Chhattisgarh deal only.

Recently, Professor M Kodandaram, Telangana Joint Action Committee chairman, criticized the government for signing PPAs as he found several loopholes which might lead to a tariff hike in the future. Kodandaram further said that there's no clarity on who'll fix the tariff whether Telangana or Chhattisgarh.

The Telangana Electricity Employees Joint Action Committee coordinator K Raghu also wondered why the Telangana government didn't go for competitive bidding. He questioned on the necessity for the government to enter into PPAs. Raghu also said that the PPA will result in an additional burden of Rs. 1.25 to Rs. 1.75 per unit. He also raised objection against clauses in the PPA which forced TS Discoms to pay huge fixed costs to Chhattisgarh and pointed out that the fuel supply agreement was not enclosed within the PPA.