Hyderabad: Andhra Pradesh, which owns India’s third largest public sector power generation firm, is considering engaging private companies to develop three new hydropower projects.

The state government issued an order late April to constitute a committee of officials from the ministries of irrigation, finance and power to decide on involving private firms and to weigh options on how the projects would be executed.

The state government is keen to engage private firms as it is already burdened with irrigation projects and is finding it difficult to meet the expenses of the hydropower projects, said a senior bureaucrat in the Andhra Pradesh major irrigation ministry.

The three new projects will have a combined installed capacity of 1,730MW, he added, asking not to be named. That would be nearly half the existing hydel power capacity of Andhra Pradesh Power Generation Corp. Ltd (APGenco).

“Since APGenco is currently unable to execute the new hydel projects for want of funds, we are exploring the options to seek support from the private sector players,” the bureaucrat said.

Andhra Pradesh was the first state to open its doors to private investments in power generation. Of its total capacity of 13,186.25MW, 2,363.17MW, or nearly 18%, is with private firms, a large portion it from gas-based projects and the rest from mini-hydel, wind, co-generation, waste heat and biomass.

Private firms are not engaged in any of the hydropower projects in the state.

Andhra Pradesh also receives 2,963.22MW of power as its share from the Union government and 272MW from the joint sector with private entities. But with demand increasing from the industrial, agriculture and domestic sectors, the state has decided to add 11,882MW of capacity by March 2016 at an estimated Rs68,130 crore.

APGenco, the third largest state-owned power producer after NTPC Ltd and Maharashtra State Power Generation Co. Ltd, is already executing 653MW of hydel power projects in the state, investing Rs2,326 crore. These are expected to be operational between January 2011 and January 2013.

APGenco has a power generation capacity of 7,587.86MW, comprising 3,882.5MW thermal, 3,703.36MW hydroelectric and 2MW wind power.

The new hydropower projects proposed, the irrigation ministry bureaucrat said, are planned over three irrigation projects—960MW at Polavaram, 450MW at Kanthanpally and 320MW at Dummugudem. Andhra Pradesh wants work on the three projects to begin by the end of the year.

The projects would provide a business opportunity of Rs6,920-8,650 crore to private firms, said the bureaucrat quoted earlier.

“The options we are exploring in seeking the private sector support for execution of the fresh hydropower projects include BOT (build, operate and transfer), BOOT (build, own, operate and transfer) and PPP (public-private partnership),” he added.

The panel being appointed has to identify a model that will reduce the financial burden and risk of the state government, while ensuring power supply at affordable rates, he added.

cr.sukumar@livemint.com