White Paper on A.P. power sector reveals ₹1.29 lakh crore burden on govt.

Policy paralysis, unusual and hasty decisions, abolition of PPAs by the previous YSRCP govt. are some of the major reasons for the huge losses, says Chandrababu Naidu

Published - July 09, 2024 09:16 pm IST - AMARAVATI

Chief Minister N. Chandrababu Naidu giving a presentation during the release of a White Paper on the power sector at the Secretariat in Amaravati on Tuesday.

Chief Minister N. Chandrababu Naidu giving a presentation during the release of a White Paper on the power sector at the Secretariat in Amaravati on Tuesday. | Photo Credit: SPECIAL ARRANGEMENT

Stating that the TDP-led NDA government inherited significant challenges in the power sector in terms of addressing the legacy losses of ₹1,29,503 crore created by the previous YSR Congress Party (YSRCP) government, Chief Minister Nara Chandrababu Naidu said that he would bring back investors’ confidence and rebuild ‘Brand Andhra Pradesh’.

Releasing a White Paper on the status of Power Sector on July 9 (Tuesday) at the Secretariat here, along with Minister for Energy Gottipati Ravi Kumar, Mr. Naidu lashed out at former CM Y.S. Jagan Mohan Reddy for ‘putting unbearable power tariff burden’ on domestic consumers.

Mr. Naidu explained that policy paralysis, unusual and hasty decisions, bad governance and abruptly abolishing power purchase agreements, were some of the major reasons for the huge losses. The total loss of ₹1,29,503 crore includes tariff burden on consumers of ₹32,166 crore, increase in debt of power utilities by ₹49,496 crore and losses of ₹47,741 crore due to inefficient governance.

Energy sales have increased from 54,555 MU in financial year 2018-19 to 69,113 MU in 2023-24, at a growth rate of 4.8% which is one of the lowest in the country. The per capita electricity consumption of A.P. increased by only 123 kWh from 2018-19 to 2022-23 when compared to an increase of 146 kWh at national level. This was mainly due to steep tariff increase and re-imposing power cuts due to poor planning which has affected the economic growth (GSDP) of the State, the Chief Minister elaborated.

Power cuts

The DISCOMs (power distribution companies) resorted to power cuts in 2022-23 for domestic consumers due to a lack of power procurement planning. This was due to intentional delay in commissioning of the Polavaram hydro-electric power project (960 MW), SDSTPS (Krishnapatnam) Stage-II Unit-3 (800 MW) and VTPS Stage-V Unit-8 (800 MW) stations. These measures affected all categories of consumers, including rural domestic consumers, with power cuts of one hour per day during daytime, 30 minutes per day for urban domestic consumers, up to 12 hours for continuous process industries, up to 15 hours for non-continuous process industries, up to 12 hours for commercial consumers and up to two hours for agricultural consumers, he said.

Investments in APSBCL

As of 2022-23, the A.P. power utilities had outstanding government receivables (subsidy dues and department arrears) of ₹23,572 crore. Instead of paying these, the State government insisted that APGENCO and APTRANSCO should invest Pension & Gratuity (P&G) Trust Funds and Provident Fund (PF) Trust Funds in AP State Beverages Corporation Limited (APSBCL) bonds. The two companies invested ₹2,134 crore and ₹379 crore, respectively, in the APSBCL bonds at a coupon rate of 8.50%. These bonds were guaranteed by the government.

In July 2019, the government constituted a High-Level Negotiation Committee (HLNC) to review, negotiate and bring down the tariffs of already concluded wind and solar power purchase agreements (PPAs). This was challenged by the developers in the High Court, which directed the DISCOMs to pay an interim tariff of ₹2.43 per unit for wind power projects and ₹2.44 per unit for solar power projects instead of the PPA tariff. In March 2022, the court directed the DISCOMs to make payments as per tariffs in the PPAs. To clear the outstanding dues to the wind and solar developers, the DISCOMs resorted to working capital loans of around ₹9,000 crore.

Mr. Naidu announced that this government was not going to take any harsh decision, which would dent the investor confidence. He appealed to all stakeholders for support to make Andhra Pradesh an energy hub of the future.

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