Andhra Pradesh

Streamlining finances of power sector: Energy Secretary

The finances of the power sector, especially the loan burden post bifurcation and the dip in revenues owing to COVID-19, are a major concern but the government is taking all steps to streamline it, says Energy Secretary and CMD of AP Transco N. Srikanth.

It’s a whopping ₹70,500 crore loan outstanding and ₹7,000 crore interest and debt servicing per annum which the State is expected to manage, according to him.

In an exclusive interaction with The Hindu, Mr. Srikanth said, the outstanding loan immediately after the bifurcation was to the tune of ₹31,000 crore. It had now grown up to ₹70,500 crore due to the difference between the income and expenditure and other factors.

“There are a bunch of reasons for the debt burden. Post bifurcation, the subsidy arrears from the government, about ₹1,000 crore per month, have not been paid and they are accumulated over a period of time. We’ve lost coal mines to Telangana and are forced to buy coal and transport it to plants here from far away locations which resulted in about ₹3,000 crore burden per annum. In addition, about ₹1,500 crore burden is added in the form of funding new projects,” Mr. Srikant said.

Burden of new plants

The State is adding 3,700 MW to its production capacity – 800 MWx3 at Krishnapatnam, 800 MW at VTPS and 500 MW in the Rayalaseema Thermal Power Project. Usually, it costs about ₹5.5 crore per MW but due to time and cost overruns, the capital expenditure has gone up to ₹9 crore per MW, which is about ₹1,500 crore additional cost a year, according to government sources.

COVID loss, dues

Losses due to COVID-19 scenario and long pending receivables from panchayats are also believed to be another ₹6,700 crore burden. In the current financial year, there is a deficit of ₹2,000 crore due to COVID and resultant dip in industrial activity. “Panchayat dues on street lighting etc. are about ₹1,200 crore per annum and the total accumulation till date is ₹4,700 crore. Industrial and commercial consumption fell by 30-40%. It has come to normal from October. The State government, on its part, is making arrangements to handle the payments till date,” said Mr. Srikanth.

This apart, the power department is also burdened with wind and solar adequacy cost which is about ₹3,000 crore per annum. The ₹600 crore gap between monthly income and expenditure is another major factor in debt burden.

Solutions

New loans, Central support and State payments are actively used to reduce the debt burden, said the CMD. “We can’t pass on the burden to the consumer as per regulations. So, we are taking new loans, using Central schemes and State funds for the repayments. Last year, the State released ₹17,900 crore arrears of power dues which has reduced the current due at ₹10,800 crore. We are also accessing the Central government’s Atmanirbhar loans to the tune of ₹6,600 crore to pay arrears of power purchase firms and debt servicing,” said Mr. Srikanth.

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Printable version | Jan 20, 2021 4:45:14 PM | https://www.thehindu.com/news/national/andhra-pradesh/streamlining-finances-of-power-sector-energy-secretary/article33172485.ece

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