State in talks with Petroleum ministry to bring re-liquefied natural gas from Hazira
Having faced a tight demand-supply situation last summer, the Andhra Pradesh government is gearing up to keep the power supply situation manageable in the coming months.
Power utilities in the state struggled to bridge the demand-supply gap for 3-4 months beginning with February last year. It had led to a 30-35 per cent production loss for the manufacturing industry on account of a 4-hour peak load cut and a three-day holiday (no power supply) for one week.
The authorities say there won’t be a repeat this time.
The AP Transmission Corporation (APTransco), which coordinates power supply among the four state-owned distribution companies (discoms), is already negotiating with the Petroleum Ministry and GAIL to bring re-liquefied natural gas (RLNG) from Hazira to ensure private gas projects generate at full capacity during the summer months.
“We are in discussions with Gas Authority of India Limited (GAIL) and the officials of the Petroleum Ministry to make arrangements for RLNG to overcome the shortfall in supply of natural gas from the K-G Basin,” Ajay Jain, chairman & managing director of APTransco told Business Standard. The commercial terms of the proposed arrangement were being worked out, he said.
It is an irony that even as the landfall point of gas produced from the K-G Basin, which supplies half of the country's natural gas, is in the state, AP has to look at bringing RLNG all the way from the Western coast.
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APTransco has also booked the north-south corridor three months in advance to get 960 Mw from outside the state beginning January 31 this year. Though a similar action has been taken for March and April, which are likely to witness a maximum peak load of over 270 million units, the actual availability may vary as other southern states are also expected to book the corridor that can supply only 1,000 Mw at any given point.
Jain, however, said industrial supply would be comfortable in the coming months with the proposed plans in place.
Industry hopeful
Confederation of Indian Industry (CII) - Andhra Pradesh president Shakti Sagar is hopeful industries would be spared power cuts this time with alternative arrangements in place.
Stating that they had started consultations with the power utilities in August last year itself, Sekhar Agarwal, president of Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci), said, “The authorities have assured us uninterrupted supply this time. We are hopeful that at least 90 per cent supply is maintained during these critical months,” he said. Quality supply in terms of voltage fluctuations though still remains an issue.
Almost 80 per cent of the manufacturing activity is centred around the state capital, which is in the grip of a serious political and social turmoil arising out of the demand for separate Telangana.
The effort to utilise the idle capacity in gas projects also assumes significance in the wake of uncertainty over availability of expected quantity of power and the likely spike in consumption over and above the projected growth of 9 per cent in demand. Private power projects having a total installed capacity of over 3,000 Mw are generating at 75 per cent of their capacity as the feedstock from Reliance's K-G D6 fields has been reduced on account of a stated dip in gas production.
Price, no different
Though the spot RLNG prices are much higher compared with the natural gas supplied by RIL from the KG Basin, Jain said they would be paying Rs 5 per unit of power generated from this fuel, which is equal to the price to be paid for the additional power purchases from outside the state. This time, the per unit cost is lower as against an average price of Rs7 paid in the past on account of advance booking.
A meeting with all the independent power producers (IPPs) last week with regard to the pricing of power, especially for generation based on RLNG, was also held.
The state government has been spending anywhere between Rs 1,000 crore and Rs 1,500 crore on buying power from outside the state in addition to the budgetary provision made in favour of reimbursement of subsidies to power utilities as they get near-zero revenue from the agriculture sector, which accounts for almost 40 per cent of the power consumption. The energy department has projected a budgetary requirement of about Rs 4,500 crore for both additional purchases and subsidy component for the next financial year.
Low priority for industry?
As the power situation remained a politically sensitive issue owing to excessive dependence of cultivation on ground water, especially in the Telangana region, the industry had to bear the brunt whenever consumption went beyond manageable limits.
The authorities admit that industry comes fourth on the priority list of the government just above the daytime power supply to households during summer and any shortage to be managed by imposing load relief has to naturally starts from below.
“We could not meet the order schedule deadline. Apart from increased competition from neighbouring states, the local manufacturing sector is already facing competition from Chinese products,” Shekhar Agarwal pointed out. The state witnessed a mere 6 per cent growth last year, a steep decline compared with 11 per cent registered in 2009.
Though the industries have been assured of the supply, they are worried they need to pay 75 paise per unit more on drawal during peak hours (4 hours a day). This is addition to the general hike in the industrial power tariff.
Industries are currently charged Rs 3.52 per unit in the case of HT (at 11kv) consumers and Rs 4.13 per unit for LT consumers. For HT consumers, who draw power at 132 Kv level, the new tariff is Rs 2.99 per unit.