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Report to AP Cabinet panel: TDP govt ‘procured about 23% very high cost renewable power’

According to the report, wind energy is available at prices between Rs 2/kWh and Rs 3/kWh, which is evident from the Solar Energy Corporation of India (SECI) bid of Rs 2.43/kWh in Gujarat.

Written by Sreenivas Janyala | Hyderabad | Published: July 16, 2019 1:25:51 am
Andhra Pradesh, Telugu Desam Party, TDP, Chandrababu naidu, YSR Congress, jagan mohan reddy, Indian express Andhra Pradesh Chief Minister Jagan Mohan Reddy

The previous Telugu Desam Party (TDP) government in Andhra Pradesh purchased renewable energy at very high costs and unnecessary payments of back down fixed costs to accommodate the high cost renewable power were made causing the loss of hundreds of crores to the state, according to a report submitted to the Cabinet sub-committee probing energy deals made by the TDP government.

A report prepared for the perusal of the Cabinet sub-committee — constituted by the YSR Congress government in the state to probe power purchase agreements (PPAs) awarded during the TDP regime — states that under the garb of renewable power purchase obligations (RPPO) of 5 per cent, the TDP government procured about 23 per cent very high cost renewable power. The state incurred loss due to these high cost purchases beyond RPPO.

“Wind energy in excess of RPPO was purchased at Rs 4.84 per unit. For this purpose, the thermal energy which is readily available at Rs 4.2 per kWh (fixed cost of Rs 1.1/kWh plus variable cost of Rs 3.1/kWh) was backed down. We had to pay this fixed cost of about Rs 1.1/kWh irrespective of whether we consumed the power or not. Thus, the effective cost of wind power that is purchased became Rs 5.94/kWh (Rs 4.84/kWh plus Rs 1.1/kWh). There is no way all this could have happened without the then leadership being aware of these irregularities,’’ the report states.

As per the report, power available through thermal power stations at Rs 4.2/kWh was procured at Rs 5.94/kWh to facilitate wind power producers by paying Rs 1.74/kWh extra. Similarly, solar energy was purchased in excess of RPPO at costs up to Rs 6.99/kWh. The effective cost of this solar power after adding Rs 1.1/kWh back down fixed cost of available thermal plants is up to Rs 8.09 /kWh, the report adds.

“The state made purchases beyond RPPO knowing very well that they are going to cause losses of about Rs 1,500 crore per year for the last three years which will continue for the next 22 years of the PPA period. The backing down of thermal plants for all the purchases beyond RPPO led to wasteful payment of back down fixed costs of Rs 1,000 per year. It is significant to note that low prices have been prevailing in the country,’’ it notes.

According to the report, wind energy is available at prices between Rs 2/kWh and Rs 3/kWh, which is evident from the Solar Energy Corporation of India (SECI) bid of Rs 2.43/kWh in Gujarat.

“The TDP government’s argument that different states have different plant load factors is not correct, especially in wind energy. Power which was available at a cost of Rs 3.53/kWh is purchased at Rs 5.94/kWh paying an excess of Rs 2.41/kWh. Similarly, solar energy has been available at prices between Rs 2/kWh and Rs 3/kWh as per SECI bid of Rs 2.44/kWh in Rajasthan. Today, 750 MW of solar energy is offered by SECI in AP at Rs 2.78/kWh. Solar power which was available at an effective cost of Rs 3.54/kWh is purchased at Rs 8.09/kWh paying an excess of Rs 4.21/kWh. Surprisingly, 70 per cent of this power is coming from 5 producers only,’’ the report says.

“Of the 221 PPAs in wind energy, more than Rs 40,000 crore worth of PPAs signed after 2014 benefitted only five players. Wrong calculations were filed before APERC leading to fixing of high costs and wind and solar projects were sanctioned indiscriminately knowing very well that RPPO was surpassed and without assessing financial implications,’’ it further states.

The report added that the previous government also purchased power at high cost from Spectrum Power Generation Ltd and Lanco, even though their PPAs expired in 2016. “The previous government did not state the facts to GoI seeking reallocation of gas to GMR which had a long term PPA up to 2029 at a lower price. Instead they entered into short term PPA at higher rate with Lanco and Spectrum after PPAs lapsed causing crores loss,” the report reveals.

The Expert Committee on power is also taking the views of the renewable energy sellers “fairly and transparently’’, with a note saying it “will look into these serious irregularities and our government will examine the criminal angle and appropriate legal action would be taken.”

Meanwhile, Kala Venkat Rao, who was the energy minister in the TDP regime, said all decisions were taken as per central government rules and regulations.

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