M. Malleswara Rao

New arrangement to be in place

Transmission lines will be available to private companies

Firms can sell power to 3rd party at price they want

HYDERABAD: The system of signing agreements with developers of private projects to purchase power is being dispensed with by the government and APTransco and a new arrangement is being introduced in its place.

As part of this arrangement, AP Transco will make its vast network of transmission lines available to the private power companies so that they can sell power to a third party at a price they want.

A decision to bid farewell to power purchase agreements (PPAs) has been taken in the light of problems encountered in respect of Lanco, Spectrum, Vemagiri and Gouthami projects. Certain provisions of the PPAs turned out to be contentious issues during the 2004 elections when the opposition parties accused the government of showing special favours to developers and burdening APTransco and the consumers.

In doing away with the PPAs, the government chose to take advantage of the “open access system” (OAS) that came into force all over the country under the Central Electricity Act, 2003.

‘Merchant plant’

Under the OAS, any developer can set up a power project as a “merchant plant” without the usual government clearances, and sell the power generated to a third party -- be it Power Trading Corporation, a State or an industry within the State.

The first such “merchant plant” in the State is coming up at Polatithippa near Machilipatam with a capacity of 1600 MW.

A senior official said this coal-based power station which would use “super critical technology” was being set up at a cost of Rs 8,000 crore by Gayathri Group which belongs to the family of T. Subbarami Reddy, MP. The government recently allotted 1,200 acres for the project.

With Genco

The Transco, however, will necessarily sign power purchase agreements with APGenco which is setting up a series of power stations, for two reasons -- the latter is a government undertaking and its unit price is low, almost equal to that of NTPC.