Telangana government refuses to renew Lanco power deals

Hyderabad: While the Telangana state government has refused to sign a Power Purchase Agreement with Lanco power project, owned by former Congress MP Lagadapati Rajagopal, the AP government is in favour of inking the deal. The high cost of generation from gas-based Lanco power project and the availability of power at cheaper rates in the market has led to the Telangana government rethinking and not giving the nod for renewing the PPA with Lanco.

Sources said a recent me-eting of Mr Rajagopal with AP Chief Minister N. Chandrababu Naidu was held to sign PPA with Lanco by AP Transco.  When Mr Rajagopal met Mr Naidu, everybody tho-ught it was a political meeting. But after the bifurcation of the state, Mr Rajagopal has quit politics and is focusing on business. A senior official in the AP energy department co-mmented that it was surprise why power was being bought from Lanco when AP was in surplus power and power was available at low rates. He said political reasons may lead the AP government to take this decision, adding that political power was “more powerful than real power”.

TS Transco officials said they did not approve of the PPA with Lanco, GVK and Spectrum power projects due to high cost of power from these plants. After the state bifurcation, AP and TS governments signed PPA with Lanco power project to purchase 1,100 MW power for one year. After the expiry of PPA period, the TS government did not renew the PPA.

TS energy officials said initially the Telangana energy department was req-uesting necessary approval for renewal of PPA with Lanco. However, after examining high cost from the gas-based projects, they decided against it. They added that the cost of power from Lanco wou-ld be more than Rs 6 per unit whereas power was available for lesser than '4 per unit in the open market.

Meanwhile, the AP Transco officials recently met and discussed the PPA with Lanco power project. AP Transco joint managing director Dinesh Paruchuri said they have referred this issue to AP Electricity Regulatory Commission. “The government will take a decision according to the directions of Electricity Regulatory Commission, Mr Paruchuri said.