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Budget For Power Exposes Chinks In Energy Policy?


Is the latest budgetary allocation of Rs. 3,186 crore for the energy sector in Andhra Pradesh enough for covering all the new agriculture connections and below poverty line families ? This question raised during the recent AP Electricity Regulatory Commission's public hearing on Annual Revenue Requirement and tariff revision proposals of APSPDCL and APEPDCL brought out the contradictions in the government's energy policy. Consumer activists wondered how the Discoms could sustain when the support from the Government was grossly inadequate compared to the promises it was making and when there was no co-ordination between two departments of the Government.

A startling fact came out when the APERC chairman, G. Bhavani Prasad asked what would the Discoms do if the revenue requirement exceeded the budget provision. Responding Rahul Pande, Additional Secretary, Energy department revealed that though proposals for Rs. 3,600 crore for the sector, the Finance department had brought it down to Rs. 3,186 crore. As for the BPL families, K. Vijayanand, CMD of AP Transco merely told the Commission that the Government was committed to their welfare.

The allocation is important as it indicates the Government's commitment to the provision of subsidy that will have a bearing on the proposals for tariff hikes. Other interesting points were raised at the public hearing. Activists like M. Venugopala Rao, convenor of the Centre for Power Studies, expressed concern at the delay in the buyout of the GVK power project leading to the payment of avoidable excess fixed costs of Rs. 10 crore to it though seven months have passed since the expiry of what was one of the controversial Power Purchase Agreements entered with the Discoms.

Variable cost:- Even after a year of issuance of buy-out notice and receipt of valuation report, the GVK project was allowed to generate and supply power to the Discoms whatever the quantum given the shortage of natural gas and the latter kept religiously paying the fixed costs, which is bound to be burden on the consumer, he added. Responding, R. Muthyala Raju, CMD of APEPDCL, told the Commission that buy- out process is likely to be completed by March–end.

Mr. Rao said there was no justification in the Discoms' proposal for increase in variable cost of 3% for power to be generated and supplied by AP Genco, TS Genco and Central Generating Stations for the year 2016-17. For working out variable costs, the Discoms should take the prices of fuels existing at the time of preparing and submitting their ARR proposals but it was not done, he said. He wondered why Discoms were seeking the hike when the freight costs have come down due to reduction in price of diesel. He recalled that payment of higher coal transportation costs by AP Genco leading to overcharging of the consumers was brought to the notice of the Secretary, department of energy, AP government by former Union Secretary for Power E.A.S. Sarma, in a letter.

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