APGenco signs agreement on sharing power from Jurala project

The AP Power Generation Corporation (APGenco) has finally concluded the agreement with the Power Company of Karnataka Limited on sharing power generated from the Priyadarshini Jurala Hydel project.

APGenco officials signed the Power Purchase Agreement (PPA) with their Karnataka counterparts in Bangalore on Monday. The PPA between the power utilities of the two States has been long overdue, but the timing of signing the agreement has raised many an eyebrow. The decision to sign an agreement at this juncture, with barely a fortnight left for the new State of Telangana to come into existence, has raised several doubts about the intentions of officials concerned in rushing through the process without allowing the new government to look into the issue.

Once it is operationalised, the PPA will enable Karnataka to draw around 182 million units of power from the project, which has an installed capacity of 234 MW. Karnataka, in return, has agreed to bear half the cost of construction of the power block, which at the time of the signing of the agreement between the then Karnataka Chief Minister Devraj Urs and AP Minister Marri Channa Reddy in 1978, was estimated to be Rs. 142 crore. Accordingly, the Karnataka power utility was expected to pay Rs. 71 crore for the construction of the power block.

The project, however, was hit by cost overruns owing to the delay in its completion. This, in turn, resulted in huge expenditure on the part of APGenco but the agreement with Karnataka was not revised accordingly, resulting in a controversy. According to sources, APGenco had spent around Rs. 800 crore for the construction of the power block. This would mean that Karnataka needs to repay close to Rs. 400 crore to the power utility. But the new PPA finds no mention of this and the quantum received from Karnataka remains Rs. 70 crore.

APGenco Managing Director K. Vijayanand, however, refuted charges that the agreement was signed in a hurry. “The process has been continuing since over a year now and the utilities of both the States have obtained clearances from the respective regulatory commissions too. Signing a PPA is part of the efforts to concretise the agreement,” he told The Hindu.

He said the APGenco had received payment of Rs. 70 crore from the PCKL and the remaining amount would be recovered from consumers over a period of time. The Karnataka power utility will also seek the regulator’s approval for recovering the costs incurred on the project.