High-level panel toreview power deals

Idea is to pull DISCOMs out of the red

July 02, 2019 01:33 am | Updated 01:33 am IST - VIJAYAWADA

The government has constituted a committee on the Power Purchase Agreements (PPAs) on Monday to review, negotiate and reduce the high wind and solar power purchase prices and submit its report in 45 days.

As per G.O RT No. 63, the committee comprises Ministers Buggana Rajendranath Reddy (Finance) and Balineni Srinivasa Reddy (Energy), Advocate General Subrahmanyam Sriram, Principal Advisor to CM Ajeya Kallam, Principal Secretary (Finance) S.S. Rawat, Secretary (Energy) N. Srikant, Special Secretary to CM D. Krishna and APSPDCL former CMD Gopal Reddy as members and AP-Transco Joint Managing Director as the convener.

It was stated that the Power Distribution Companies (DISCOMS) in the State are in financial crisis because the power purchase dues amounted to a whopping ₹20,000 crore. This is due to the abnormally priced wind and solar PPAs entered in the recent years.

The government has, therefore, formed a committee to provide affordable power to consumers and pull DISCOMS out of the red.

The committee has to factor in the lowest wind and solar energy rates in the corresponding years in the country, current rates, opportunity cost for power from AP-Genco plants, existing thermal contracts and Central generating station allocations.

‘Colossal loss’

It may be noted that in a power sector review last week, Chief Minister Y.S. Jagan Mohan Reddy said illegal power purchases caused a dent to the exchequer to the tune of approximately ₹2,635 crore and pointed out that the previous government had purchased power on a ‘must-run’ basis since 2015 without following a merit order, which resulted in the purchase of power at exorbitant costs from companies chosen as per the ‘government’s priorities’ in spite of its availability at cheaper rates.

Wind power was purchased at ₹4.83 per unit and solar from ₹4.50 to ₹6.80 per unit and a fixed charge of ₹1.25 per unit was paid to AP-Genco even when power generated by it was not purchased by the State.

The TDP government spent ₹7 crore per Megawatt (MW) against ₹4.49 crore to ₹4.64 crore per MW of power generated in other States.

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