Worry over cost of Chhattisgarh power

Hyderabad: Ever since the Chhattisgarh Electricity Regulatory Commission (CERC) gave its order on July 7 stating that the capital cost of the 1,000 MW Marwa Thermal Power Plant (MTPP 500x2) is Rs 8,992.5 crore, there has been considerable speculation about what will be the purchasing price for Telangana. 

Energy analysts say that the purchasing cost will be over Rs 6 per unit as against the current Rs 3.90/unit.

In November 2014 the Telangana government entered into a power purchase agreement (PPA) with the Chhattisgarh government to buy 1,000 MW from MTPP for 12 years. TS Discoms would incur over '1,000 crore burden every year, so total outgo for 12 years will be over '12,000 crore, said analysts.

The final tariff is based on the capital cost as approved by CERC, but it does not include charges such as water charges, pension, gratuity contribution, FCA, start up power charges, SLDC charges, taxes and duties if any, and other incidental charges, which shall be billed separately as ‘pass through’ component.

CERC directed CSPGCL to bill beneficiary of Marwa TPP as per the generation tariff approved in the latest order. The order will be applicable from July 1, 2018, and remain in force till March 31, 2021.

Combining all the above additional costs, the purchasing price per unit will be '6.03 as against the government’s claim of '3.71 per unit. And the present purchasing price is '3.90 per unit. Even if trading margin and inter-state transmission charges are lowered, the minimum purchase rate is expected to be '5.50 per unit.

Mummareddi Venugopala Rao of the Centre for Power Studies, is critical of the deal. “The inputs are broadly as per standard regulations and yardsticks. The way TS Transco and its officials are trying to deflate the tariff to be paid by the Discoms is obviously to hoodwink the consumers,” he said.

TS Genco insists the purchasing price will come down after the CERC ruling.

D Prabhakar Rao, CMD, TS Genco, said, “CERC approved 1,000 MW MTPP at '8,892.50 crore including capital cost of '8,019.25 crore. Energy charges (fuel cost) per unit will be '1.393 and variable cost is '2.32. Hence, the total purchasing price per unit will be '3.71 for us as against the current price of '3.90 per unit. This price will be effective from 2018-19 till 2020-21. We also forecast drop in fixed charges due to captive mines in Chhattisgarh.” Fixed charges in 2018-19 are '1,606 cr and will come down to '1,559.30 cr in 2020-21. CERC asked TS to pay '1,606 crore as fixed charges for 614.5 crore units resulting in '2.64 per unit. If coal cost of '1.393 per unit is added to this, it will take the total purchase price per unit to '4.03 for TS. But TS Genco says purchasing price will be lower at '3.71 per unit as against the existing rate of '3.90 per unit

Venugopala Rao explained that “At 80 per cent, the PLF of MTPP, “With a PLF (plant load factor) of 80 per cent, the annual generation works out to 7,008 mu. Basing on this, a trading margin of 7 paisa per unit works out to '49.05 crore per annum and to '588.60 crore for the period of 12 years of the PPA. In addition, applicable service charges, if any, shall also be borne by Telangana discoms. If it is a PPA between a power generating company selected through the process of competitive bidding and the Discoms, this unwarranted additional burden can and will be totally avoided and interest of the consumers protected.”

Analysts said that CERC further allowed charging for water consumed for the Marwa plant at '0.17 per unit. Intra-state transmission charge (within Chhattisgarh) is '0.33 per unit. The true-up charges as adjustment of coal prices is in the range '0.20 per unit.