Following up on the resolution passed in the December 1 Cabinet meeting, the government on Wednesday issued an order allowing the AP-Genco to take up the execution of the 12 X 80 MW Polavaram hydro electric project subject to certain conditions.
The project is to be awarded as per the AP-Genco Board’s recommendation.
As per GO MS. No. 34, the AP-Genco has to appoint a Project Management Agency (PMA) and an internal management team, which should review the project regularly and own up responsibility of completing the project in time without any cost and time overruns and bear the additional cost, if any, due to delay in the completion and not pass it on to the Discoms. The other conditions are: AP-Genco should reduce the Operations and Maintenance cost norm of 2% to 1.5% per annum in order to reduce the tariff further; make efforts to avail the ‘Interest Subvention Scheme’ being formulated by Government of India by completing the project within the scheduled period to reduce the tariff; negotiate with the REC and other financial institutions to avail loan at competitive interest rates in order to reduce the additional interest burden and meet the equity requirement from internal resources; coordinate with the Irrigation Department to ensure that all the fronts are made available to the agency for speedy completion of the project; and obtain approval of the APERC for the signing of Power Purchase Agreement with the Discoms.
It was stated in the GO that the AP-Genco had sought approval of the government for establishing the hydro power project at Polavaram since it was easy to manage sudden variations in the generation of wind and solar power, and generate large reactive power in both lead and lag directions, which was the key to maintaining grid voltage stability.
Hydro power is said to be the cleanest, greenest, bulk non-fossil power, which has lowest carbon footprint. Due to quick ramping ability, it is best suited for grid stability and renewable grid integration.
Principal Secretary (energy) Ajay Jain told The Hindu that the project would cost approximately ₹5,350 crore and the tariff would be levelled (average of fixed and variable costs over the PPA period) at ₹4.15 per unit.