Post subsidy, few takers for gas power

Of all the southern states only Telangana & TN remain the potential buyers of additional power even though the supply-demand gap is within the manageable limits

Private power producers who recently won gas allocation for their stranded capacities in Andhra Pradesh are yet to find enough buyers for power as there is no scramble for additional purchases among the southern states in the light of surplus position in some parts, including AP.

The three  major power and infrastructure companies — GMR, Lanco and GVK — got gas allocation for operating a little over 2,000 Mw of stranded capacity at 25 per cent load factor for four months starting June 1, in the recently concluded auction conducted by the power ministry.

An additional 500-Mw could be generated by these plants at 25 per cent PLF. However, Andhra Pradesh power utilities have agreed to buy only 147 Mw from the 217-Mw Jegurupadu stage1 project of GVK and the 370-Mw Vemagari plant of the GMR group.

This leaves GMR’s 384 Mw (GREL) project and two of Lanco's projects of 355 Mw and 748 Mw capacity, which are also entitled to operate under the Centre’s Power Sector Development Fund scheme to find buyers outside AP. However, GVK is not facing any such issues as it won gas allocation only for the Jegurupadu project, according to the company officials.

As AP and Telangana both have a right over the PPAs of these two projects, the power may also be shared between the two states according to the 54:46 ratio prescribed under the provisions of the AP Reorganisation Act.

For the AP power utilities, buying additional power at Rs 4.70 per unit under the Centre’s scheme makes no sense at all. “We are currently procuring around 10 million units of power a day from open market at a price ranging between Rs 3.50 paise and Rs 4.20 paise, which is much lower than the subsidy power,” a senior AP Transco official told Business Standard.

Meanwhile, a spokesperson of Lanco group, when contacted, said the company was in talks with various power utilities in the region for sale of power. GMR refused to comment on this matter at this stage.

Of all the southern states only Telangana and Tamil Nadu remain the potential buyers of additional power even though the supply-demand gap is within the manageable limits. The situation may turn serious in Telangana if the monsoons fails  as the underground water is a predominant source of irrigation in this state. Telangana has the highest number of agriculture services.

“We may purchase some quantity from the stranded gas power capacity, but we have not yet applied our mind to the issue. We are willing to buy power as long as it is available at under Rs 6 per unit, “ D Prabhakar Rao, chairman and managing director of Telangana State Transmission Corporation, said.

According to Rao, Telangana needs to buy about 1,500 Mw  or around 40 million units a day till March next year when it will add 2,500 Mw of new capacity under the state sector.