APGenco faces threat to dominance in generation

The dominance of the Generation Corporation of AP (APGenco) as the biggest caterer to the state's power requirements may soon be over as private sector and central generating stations are all set to occupy its place.

According to the projections made by the Feedback Ventures Pvt Ltd, which is assisting the Transmission Corporation of AP (APTransco) in preparing the business plan for 2003-07, the volume of power to be purchased from private sector and central generating stations will be higher when compared to the purchases from APGenco from the next financial year.

The consultancy firm submitted its summary report to APTransco recently. The final report is expected by December-end.

Though private and central sector generation has increased in recent times, APGenco still holds its place as the single biggest power supplier to APTransco as the bulk purchases from APGenco and others in the present year stand at Rs 4,169 crore and Rs 3,603 crore respectively.

However in 2004, power purchases from 'others' would be to the tune of Rs 4,543 crore whereas those from APGenco will be reduced from the present level by about Rs 600 crore to Rs 3,552 crore, according to the projections.

The gap is a whopping Rs 1,000 crore and it is only a beginning in this direction. Meanwhile, the bulk sales by APGenco may rise in the future and may surpass the present level by around Rs 300 crore to touch Rs 4,368 crore in 2007 .

Going by the report of Feedback Ventures, the purchases from IPPs and others by APTransco will rise by leaps and bounds during the same period to reach Rs 8,028 crore.

The change in bulk purchases scenario in favour of private power is not entirely on account of future capacity additions, though.

That can be gauzed from the fact that capacity addition in private sector will begin only in 2005 as per the additional requirement plan approved by the APERC in April this year.

At present, APGenco has an installed capacity of 6,396 mw, while the private sector has 1,553 mw capacity. The central share is at 2,106 mw.

Genco has planned another 1,020 mw addition in thermal generation. In comparison, 2,009 mw additional generation, mostly gas-based, is proposed in the next four years in the private sector.

It is interesting to note that, despite the capacity addition, the APGenco's power generation will be around 300 million units (mu) less in 2007 than what it had generated in the year 2000, according to Feedback projections. Genco produced 26,811 mu in 2000 and 26,797 mu in 2001. It would rise to 26,330 mu only in 2007.

As of now, the reduced generation is mainly on account of fall in hydel generation as half of the Genco's installed capacity comes from hydel sources.

For the past three years, hydel generation has drastically fallen, as all the major reservoirs have nearly gone dry.

The Merit Order Despatch regime introduced by APTransco, appears to have a major role in restricting the generation capaicty of APGenco as its variable cost of power is higher than that of gas-based private power plants.

About 246.32 mu in Genco plants were backed down in the first six months of the current fiscal on account of this new policy.

Going by the projections, Genco may end up receiving only mandatory fixed costs from APTransco for a considerable portion of its installed capacity while IPPs are allowed to utilise their installed capacity to the optimum level. The report has not elaborated on the reasons behind the sudden shift in bulk purchases by APTransco.