APGenco gets nod to double capacity

Go-ahead for Power utility's 6,700 mw capacity addition to cost about Rs 25,000 crore

Returning to the primacy of the public sector role in power generation, the state government has given the Andhra Pradesh Generation Corporation (APGenco) the go-ahead for a huge 6,700 mega watts (mw) capacity addition, equivalent to the existing installed capacity, at a cost of about Rs 25,000 crore.

The Rural Electrification Corporation (REC) and the Power Finance Corporation (PFC) have evinced interest in financing these projects, apart from a clutch of other financial institutions.

In another development, APGenco has also decided to cut down the generation costs by 15 to 20 per cent during this year.

Besides the expansion plans of the Rayalaseema Thermal Power Project (RTPP) stage 2 (420 mw), Vijayawada Thermal Power Station (VTPS) stage 4 (660 mw) and a 237 mw Jurala hydel project, which are already at an advanced stage, APGenco has now proposed to take up another 2,500 mw capacity addition in thermal power projects and 2,900 mw through gas-based power projects. The new projects being envisaged are likely to come up in the next four years.

The investment requirement for all the above projects would be around Rs 25,000 crore based on an average cost at Rs 4 crore per mega watt. Among the above proposals, the financial closure for RTPP, VTPS and Jurala projects have already been achieved.

The other proposals, some of them have remained merely on paper for quite a long time, have been modified by the new government, with their capacities being increased. They are: Bhupalpally (2x250 mw), Ramagundam (2x500 mw), KTPS stage 6 (2x500) all the three are thermal, and the two gas-based power projects, namely Vemagiri (1,500 mw) and Hyderabad metropolitan power station at Sankarpally(1,400 mw).

The government has already identified land and detailed project reports and the prerequisites for the other proposals are now being worked out.

Disclosing the new plans on capacity addition here on Thursday, Ajay Jain, the managing director of APGenco, said that several financial institutions, including the public sector Rural Electrification Corporation and Power Finance Corporation had come forward to fund these projects.

Both GAIL and Reliance have also been approached for the allocation of gas by APGenco for the two gas-based power projects proposed by Genco, Jain said.

The move is in line with chief minister Y S Rajasekhara Reddy's recent announcement to make the industrial power tariff in the state the cheapest in the country, to attract big ticket investments into the state. This decision apart, several lift irrigation projects, which have been in the pipeline and which have huge power requirements could also have compelled the government for the drastic capacity addition.

In an another significant effort that may greatly improve the financial efficiency of the power utility, APGenco has decided to cut down the generation costs by 15 to 20 per cent during this year.

"Power at any cost was the earlier motto. Now it would follow the principle of power at a minimal cost," said Jain, who recently took charge as managing director at APGenco.

He referred to the Andhra Pradesh Electricity Regulatory Commission(APERC)'s recent direction to reduce the O&M costs to Rs 283 crore from the existing Rs 483 crore.

The other major effort on saving costs, according to him, would be through inventory and store management via computerisation and reducing auxiliary consumption of energy in power stations to 9 per cent from the existing 9.5 per cent.

"Beside this, we annually spend about Rs 2,000 crore on just coal and the coal freight, which also needs to be cut down by various measures," he said.

Genco has already been saving Rs 188 crore by swapping high cost loans amounting to Rs 4016 crore out of its total debt stock of Rs 5,400 crore.

The rates of interest on new loans taken by the corporation to replace the old ones are 6.6 per cent to 7 per cent for short term loans and 7.25 per cent to 7.8 per cent for the long term loans, according to Ajay Jain.