Gas-based projects, the next sticking point between AP, TS

After PPA cancellation and Srisailam waters, future of private gas-based power projects in the geographical region of Andhra Pradesh could be another bone of contention between Telangana and Andhra Pradesh.

With long-term power purchase agreements with producers of three gas-based projects set to end in a year or two, the decision on whether to extend the PPAs or to acquire the plants, is pending with both governments. First such expiry of PPA will occur in June, 2015, pertaining to the GVK Jegurupadu-I project. The agreement for 18 years was signed in 1997, in united AP. PPAs of Spectrum, Kakinada and Lanco Kondapalli projects are due in 2016. As per the agreements, the government will have the option of either continuing the PPA or buying out the plant, or allowing the producer to function independently.

In case of a buyout, appraisal of the plant’s terminal value should be entrusted to any of the listed independent consultants. In case of extension of PPA, the producer will send Renovation & Maintenance proposals for determination of fixed costs. However, in the light of state bifurcation, haze prevails over which State should exercise the right of this crucial decision. The AP Reorganisation Act has divided the State-owned plants based on their geographical location, but is mum on private projects, especially the gas-based ones where state is entitled to a decision.

Sources said APTransco has already appointed a consultant to evaluate various options. “We have taken legal opinion, which is in our favour,” an official from AP informed. The Telangana government, on the other hand, is learnt to have referred the matter to the Advocate General for legal opinion. The gas-based plants assume significance owing to their capacity to generate affordable power during peak hours.

“The projects are private ones, and Telangana has every right to act upon the PPAs. They will be of great significance for Telangana which has lost the Sileru Complex to AP. State government should act swiftly and evaluate various options independently. Already, there has been abnormal delay, and close relations between AP government and the producers is public knowledge,” noted K.Raghu, Coordinator of TEEJAC.

The huge capital cost of the plants had been paid for by Telangana people too, hence the benefits should belong to them equally, he argues.

With long-term PPAs set to end in a year or two, the decision on whether to extend them or to acquire the plants is pending