The Union Petroleum and Natural Gas Ministry is learnt to have given its favourable consent to the proposal of Andhra Pradesh Government not to suspend supply of KG-D6 gas allocation to Lanco’s Kondapalli Stage-II power plant and GMR’s Tanir Bavi to enable them to supply power on the basis of short-term contract with APTRANSCO till May 2013.

As the KG-D6 supply contract for Lanco and GMR power plants was coming to an end on May 30 this year, the Andhra Pradesh Government had said that since both the plants were supplying power to Andhra Pradesh discoms and also participating in the medium-term bidding (four years), the Empowered Group of Ministers (EGoM) should allow continuing of gas from KG-D6 to the two plants. GMR and Lanco had signed the short-term power purchase agreement (PPA) which expired on May 30, 2012. The EGoM had stated that gas supply to the two entities should be suspended after May 30 if they failed to fulfil the stipulated conditions.

Referring to the conditions, the Andhra Pradesh Government had informed the Petroleum Ministry that AP discoms had invited medium-term tenders for procurement of 2,000 MW of power for four years commencing June 1. However, due to adverse developments related to transmission corridor availability and others, medium-term procurement process is delayed by one year. “They (discoms) have also furnished the details and requested not to cancel the allocations/ supply of KG-D6 gas to the companies which would help the state meet the power demand to a certain extent. This is without prejudice to their right to insist for regulated price,” the Government letter said.

The State Government said both plants would supply power till May 31, 2013. The government said discoms had also requested the Andhra Pradesh Electricity Regulatory Commission to take a decision on tariff fixation of the aforesaid two projects with regard to procurement of power under short-term.