Power firms quote highest price to Andhra Pradesh

Power trading companies have emerged as the costliest power sellers to Andhra Pradesh.

In the backdrop of peaking demand and shortage of electricity, power firms are quoting as high as Rs 6.83 per unit.

Recently, the Andhra Pradesh government had tied up with power traders to manage the demand-supply gap agreeing to purchase power at a premium for four consecutive months, starting December 2006.

With the agriculture sector, the prime contributor to the growing energy demand during the ensuing rabi season, facing acute shortage of power, the state government has chalked out a contingency plan involving an additional expenditure of over Rs 1,150 crore towards the purchase of 2,412 million units (mu) of power during the December-March period.

The Andhra Pradesh Transmission Corporation (APTransco) has tied up with three power trading companies "" Power Trading Corporation, Tata Power Trading Company Limited (TPTL) and Reliance Energy Transmission Limited (RETL) "" to buy a total of 623.53 mu, costing Rs 404.23 crore.

The average per unit cost for December was Rs 5.98, Rs 6.16 in January, Rs 6.83 in February and Rs 6.49 in March. The state purchased close to 20 mu during the month of December.

Interestingly, the price quoted by the trading companies for the months of February and March, which are expected to see the maximum demand, is higher than the cost of power generated on naphtha fuel, which the independent power producers (IPPs) were forced to use on account of shortage in natural gas supply.

The state power utility has agreed to buy Naphtha-based power at Rs 6.30 from these IPPs by reimbursing the full variable cost of this fuel.

Besides making arrangement with the private gas power projects to buy 605.63 mu of naphtha-based power for three months starting January 2007 at a total cost of Rs 368.68 crore, the APTransco has roped in companies with captive generation. It is also proposing overdrawls from central generating stations meet the additional demand.

The projected expenditure on purchases from power traders and naphtha-based power is so high that the power utility has to shell out Rs 772.91 crore only to these two sources, which will supply 1,229.11 mu, just a little over 50 per cent of the total additional purchases planned. The remaining 1183.22 mu of power is costing the exchequer only Rs 393.65 crore.

The state government has decided to meet the entire cost of these additional purchases from the state exchequer.

Meanwhile, the power utility has sought a loan from the ICICI Bank to fund these purchases. It may be noted that most of these investments would not be recovered since the power supplied to the agriculture sector has no tariff in the state.

"We are currently buying power only from RETL and Jindal at around Rs 5.10 per unit as the demand is under control," Gopala Krishna, director (transmission), APTransco, said.

In the last few weeks, the peak hour demand in the state has been registering slightly over 150 mu, and is expected to go as high as 180-190 mu this rabi.

During the current season, the acreage under the water-intensive paddy crop alone is expected to be about 12.82 lakh hectares, compared with the normal acreage of 10.6 lakh hectares.