The looming bifurcation of the Andhra Pradesh is likely to lead to an immediate increase in power tariffs in both new states. While the division of the state and the resultant division of the energy related assets will be dealt with geographically, the allocations from Central Generating Stations will be made on the basis of energy consumption pattern of the last five years.
As per experts, the immediate impact is expected to be an increase in cost of service. However, the "to be formed" Telangana may be hit harder by the divide. The current crisis situation in terms of power shortage, increase in tariffs, shortage of resources like coal and gas as well the financial soup that the four state discoms are into, may make things more difficult for both sides.
Going by the location of power generating stations and the actual power generation, the Seemandhra region currently generates 60 per cent of the state's power and the Telangana region generates the remainder.
However, going by the consumption pattern, the consumption of the Telangana region is 60 per cent while that of Seemandhra region is 40 per cent. While this is a distortion in the current setting, basing the division of assets and allocations on these figures may lead to further distortion as per experts.
While both sides got a fair share of allocations with 56 to 60 per cent of the share going to Telangana, it is the cost of service, which will be a cause of concern. "This formula that has been worked out, will only lead to distortion as the consumption pattern in the state is lopsided towards Telangana due to undue importance given to Hyderabad and Ranga Reddy districts.
Even during the peak summer power crisis, Hyderabad and Ranga Reddy districts were suffering the least power cuts, from three to four hours, while in other districts it was as much as 18 hours in a day. This thereby gives a wrong idea of the consumption pattern in the region," said power sector expert and convener of Centre for Power Studies, M. Venugopal Rao.
While both sides might face difficulties posed by the bifurcation, the to-be formed Telangana state will be at an increased disadvantage due to special problems like having more of hydel capacity, which makes it dependent on the monsoons.
"The 900 MW Srisailam Left Bank Power House being a costlier generation option, especially during the drought years, will put Telangana at an added disadvantage. The power generated in these hydel stations can go up to Rs 9 to Rs 10 per unit," added the expert.
The Telangana region currently has an installed capacity of 5,850 MW most of which is in hydel capacity, and a demand of roughly 7,000 MW. "While this has, to some extent, been covered with larger allocations from the Central Generating Stations, this will not be enough to balance out the power requirement.
In fact, with many disadvantages, the Telangana region is most likely to see a huge increase in power tariff unless the to-be formed Telangana government is ready to offer a huge subsidy," said a senior official from APtransco.
Currently, the entire state has an installed capacity of 16,350 MW of which 10,500 MW falls in the Seemandhra region and 5,850 MW is in the Telangana region. Also, the fact that about 10 lakh of the total 16 lakh agricultural pump sets that currently get free power are located in the Telangana region which are contributors to Transmission and Distribution losses, will be a huge challenge to meet.
"Considering the existing shortage in the region and with the demand expected to grow at 10 to 12 per cent, the existing capacity addition plans for the region are very meager. Currently, only Bhopalpally Stage II, which is 600 MW, is expected in 2013-15 and another 600 MW thermal power plant by Singareni, is expected after two years.
Of the 5,850 MW installed capacity that Telangana region has over 2,400 MW is hydel and is largely dependent on the monsoons, bringing down the overall effective capacity to roughly 4,000 MW. At current market rates, energy imports may cost Rs 6,000 to Rs 10,000 crore each year.
"Sharing of power from generating stations should not be allowed as it will only lead to more complications related to sharing," says power expert and coordinator of Telangana Electricity Employees' Joint Action Committee, K. Raghu.
There are several grey areas in the Cabinet Note on bifurcation and the division of the power sector, like sharing of the transmission network, management of APGenco, APTransco etc.
Experts express serious doubts about the legality of joint management of such resources. Also the issue of sharing of power between the two states would mean 56 per cent power being transmitted from Seemandhra to Telangana and 44 per cent being transmitted from Telangana to Seemandhra region at different times. As a result, there will be an a transmission cost escalation which will ultimately fall on the consumers on both sides.
As per the Cabinet Note, transmission lines of 132 KV and higher voltage across successor states will be deemed as interstate transmission system lines. Transmission lines falling entirely within a state's territory shall be transferred to the respective state transmission utilities. Till the respective state transmission utilities become functional, APTransco will continue to function as the transmission utility for both successor states.
"There will be many transmission lines of 132 KV and 220 KV across the borders of successor states. This may cause some problems as Andhra Pradesh has very few inter-state lines with Tamil Nadu, Karnataka, Maharashtra and Odisha, perhaps in single digits. Compared to these states, the number of inter-state lines between successor states will be huge," said a former senior official from AP Electricity Regulatory Commission.
The state discoms together have long-term power purchase agreements with private power manufacturers, which are all meant to continue as per the current arrangement.
However, what puts the to-be formed states to a bigger power crisis, is that four of the existing six long-term power purchase agreements, with GVK, Spectrum, Reliance and Lanco, will come to an end over the next four years. With this, there arises a question whether these will be extended under the circumstance. Moreover, even in case of a renewal, the cost of power will see an increase as per insiders.
"The existing PPA of APGenco with private power plants will also lead to additional problems as will sharing of power. As all existing PPAs are meant to be continued, they will become inter-state projects, hence falling under the jurisdiction of the Central Regulatory Authority. This would lead to legal complications as for every small issue, discoms will have to run to Delhi. Also as most existing projects have ongoing litigations, legal complications will escalate," said power sector expert, K. Raghu.
With experts stating that the to-be formed Telangana state would be at an disadvantage as far as power was concerned, there is a demand for prioritising gas allocations and for a dedicated 4,000 MW NTPC power project in the region.
Telangana will need gas allocations for projects like the 2,100 MW Karimnagar and the 1,200 MW Shankarpally. The region is also demanding allocation of additional coal from Odisha, which has fallen in its kitty.
Projects like the 600 MW Satupally, 660 MW Ramagundam Phase I and II and Bhopalpally need to be given allocations on priority basis as per experts.
"Priority for gas allocations by the Centre should be given for Telangana. Historically the region has always had water in the Godavari River but has never been able to use it and lift irrigation is the only option available. For drawing water, power is essential and there is no other alternative than augmenting power generation.
The Government of India should take in consideration that Telangana will be catering to the largest number of pump sets in any state across the country while making allocations from Central Generating Stations.
Also, since the region is a Naxalite area, it needs encouragement and priority should given for gas allocations," said minister in-charge for power and minister for information technology, Ponnala Lakshmaiah.
"There is no clarity on NTPCs setting up 4,000 MW projects in the Telangana region and the Bill submitted in the Cabinet merely mentions that the option will be explored. We are demanding that the project be set up and that too as a dedicated one so that related complications of quota can be kept at bay," said power sector expert, K. Raghu.
Lakshmaiah, meanwhile, said that impetus to renewable energy, especially solar energy, needed to be given in the successor Telangana state. He has sent a proposal to the chief minister as well as the Energy department in this regard.
"We have been ignoring the solar potential that can be realised under the National Public Sector Undertakings to invest in solar power in Andhra Pradesh since the last six months. We needs to encourage solar power, especially in the Telangana region, and a proposal to convert 5,000 acres of the Hyderabad airport along the lines of an airport in Rajasthan has been sent," added the minister.
The minister also said that since the region was growing at the rate of 10 per cent, other potential sites for solar power development could be roofs of poultry farms (with slight modifications), go-downs and warehouses with 65 lakh tons of storage capacity across the state, side panels on highways on the Gujarat model, and canals and reservoirs.
Source- Deccan Chronicle