The acquisition of a majority stake by the National Thermal Power Corporation (NTPC) in the 1,650-MW Rayalaseema Thermal Power Plant (RTPP) located in Kadapa district appears to be well on its course going by the expert committee’s observations on the 'problems relating to RTPP and steps to make it financially viable’.
The AP-Genco sought the views of the AP Power Employees’ Joint Action Committee (JAC) on a host of recommendations made by the expert panel, which stated that the first option is to reduce costs by rationalising coal supply and staff, and that the AP-Genco may alternatively bring in a Joint Venture (JV) partner for achieving a turnaround.
The JV partner is most likely to be the public sector behemoth NTPC having ‘management control immaterial of the JV structure’.
NTPC did its homework in recent months by visiting RTPP and holding high-level deliberations with the Energy Department.
The expert committee (chaired by power sector veteran P. Gopal Reddy) advised that the JV be subject to the jurisdiction of the Central Electricity Regulatory Commission, including for tariff fixation.
Staff redeployed
As far as the staffing pattern is concerned, the AP-Genco has already issued orders for deploying 282 employees, including 52 electrical, mechanical and telecom engineers of different designations, to Sri Damodaram Sanjeevaiah Thermal Power Plant in Nellore district.
Coming to the proposed JV which looks imminent, the expert committee stated that the NTPC could make use of flexi coal supply processes and also blend imported coal with the domestic variety as it does at its Simhadri and Vallur plants.
Significantly, the NTPC is expected to raise capital at favourable rates by leveraging its Maharatna status.
Treatment of PPAs
It was recommended that the existing Power Purchase Agreements (PPAs approved by AP Electricity Regulatory Commission) be re-assigned to the JV and they (PPAs) may be redesigned if power is to be sold outside.
The AP-Genco will not be under the obligation to make further investments in the JV.
The locational disadvantage of RTPP, which results in high coal transportation costs, was duly mentioned in the expert committee report, which has been thoroughly examined by the government before the JAC was asked to give its opinion.
