Andhra Pradesh is divided over a policy favouring captive/cogeneration power plants. Maharashtra and Tamil Nadu have already announced such liberal policies.
While the states industry ministry feels only captive/cogeneration projects can end Andhra Pradeshs perennial power shortage, the energy ministry and the state electricity board do not agree.
The differing views came into sharp focus at a round-table organised by the Confederation of Indian Industry (CII) here yesterday to press the need for a liberal policy on captive/cogeneration power plants.
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Chief minister N Chandrababu Naidu, who formally opened the round-table, admitted of sharply divided views in his government. My industry secretary is in favour of captive/cogeneration, but my energy secretary and electricity board chairman are totally opposed, Naidu said.
He noted that even without a definite policy, captive generation accounted for 15 per cent of the total power generation in the state against the national average of under 8 per cent. We shall soon formulate a balanced policy, he promised.
The case for a liberal policy was strongly presented by two senior executives of Larsen & Toubro, K Venkataramanan, senior vice-president (Operations), and B M Verma, general manager (Captive & Cogen Power Projects). They gave detailed presentations in favour of their point, saying captive/ cogeneration plants were the only answer.
Nalco posted Rs 600 crore profit because it has a 720 mw captive power plant. Indals Belgaum unit has gone sick as it has no power while its Hirakud plant is prospering as it has a captive power plant, argued Verma.
Surprisingly, the liberal policy plea was opposed by a representative of private sector power producers, Gavi Siddappa, managing director, Hinduja National Power Corporation.
A former CMD of BHEL, Siddappa said such projects had no relevance in the current economic context of globalisation. In earlier years, to encourage investment in backward areas where power availability was limited, captive power plants were allowed. Now they had no role to play, he argued.
Siddappa, who is putting up a 1040 mw thermal plant at Visakhapatnam, called for bold planning in favour of large thermal and nuclear power projects to get over the power shortage.
He regretted that although independent power producers had been given licences to produce 25,000 mw, very few of them had been grounded so far. In the case of Hinduja National itself, although the license was issued in 1992, the counter-guarantee was yet to be signed, he pointed out.
Andhra Pradeshs industry secretary P C Parakh, however, disagreed.
The idea of captive projects arose because we have not been able to ground the larger projects, he said. Siddappa had himself admitted that the 1992 Hinduja project is nowhere near the starting point, Parakh added.
He said the state had added 1,200 mw to its power capacity in the past two years, but there would not be any substantial addition over the next three. In the next five years, we may not be able to add even 1,000 mw, he observed and wondered how investments would flow into the state in this scenario.
He did not see any conflict between captive power projects and the interests of the state electricity board. Let us look at the overall economy of the state and not the limited interest of the SEB, he said.
State energy secretary V S Sampath pointed out that Andhra Pradesh could not be compared with Tamil Nadu that was facing a situation his state had faced three years ago.
If you think once the policy is made, there will be a boom in power sector, you are sadly mistaken, Sampath said and
suggested alternative methods of augmenting power availability.
The joint venture with the HPCL to generate 500 mw utilising residuals of the Visakhapatnam refinery could be a good example, the energy secretary said, adding that the project could be commissioned in 18 months.
Equally vocal in opposing the plea for a liberal policy on captive power projects was the chairman of the state electricity board, J Parthasarathy.
He said the board was already facing dwindling revenue from high tension users and galloping demand from the farm sector. While cogeneration in limited areas like the sugar industry can be allowed, my view is that in future we should not encourage captive power projects, he said.