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MAY 20 2014

Power pact with Karnataka raises eyebrows

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 20th MAY 2014

The AP Power Generation Corporation (APGenco) has finally concluded the agreement with the Power Company of Karnataka Limited on sharing power generated from the Priyadarshini Jurala Hydel project.

APGenco officials signed the Power Purchase Agreement (PPA) with their Karnataka counterparts in Bangalore on Monday. The PPA has been long overdue. But the timing of signing the agreement , with barely a fortnight left for the new State of Telangana to come into existence, has raised doubts.

The PPA will enable Karnataka to draw around 182 million units of power from the project, which has an installed capacity of 234 MW. Karnataka, in return, has agreed to bear half the cost of construction of the power block, which at the time of the signing of the agreement between Devraj Urs and Marri Channa Reddy in 1978, was estimated at Rs. 142 crore. Accordingly, the Karnataka power utility was expected to pay Rs. 71 crore for the construction of the power block.

The project, however, was hit by cost overruns owing to the delay in its completion. This resulted in huge expenditure on the part of APGenco but the agreement with Karnataka was not revised accordingly, resulting in a controversy. According to sources, APGenco had spent around Rs. 800 crore for the construction of the power block. This would mean that Karnataka needs to repay close to Rs. 400 crore to the power utility. But the new PPA finds no mention of this and the quantum received from Karnataka remains Rs. 70 crore.

APGenco Managing Director K. Vijayanand, however, denied that the agreement was signed in a hurry. "The process has been continuing since over a year now," he told The Hindu .


Karnataka Power Generation Power Purchase Agreement Bangalore Power

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