India’s third largest state-owned power generating utility after NTPC Ltd and Maharashtra Power Generation Co. Ltd, Andhra Pradesh Power Generation Corp. Ltd (APGenco), is adding 8,735MW of capacity at an investment of Rs34,746 crore in 2007-12. The firm plans to more than double its capacity to 15,700MW from 6,971MW. In an interview with Mint, APGenco’s managing director Ajay Jain says there are several constraints in adding power generation capacities such as clearances, land acquisition, fuel supply and legal tussles. Edited excerpts:
Is AP self-sufficient in terms of power supply?
No. We have a peak power shortage of about 9% and energy shortage of 4.4%. Shortage has risen because of non-availability of gas. As a result, 1,500MW of gas-based projects that are ready are lying idle for more than a year. Existing gas-based projects are running at about 50% load factor.
Capacity expansion: Ajay Jain, managing director, APGenco.
What is the total installed power capacity in the state ?
As of now, the total installed power capacity in Andhra Pradesh is 12,339MW. Of this, APGenco contributes 6,971MW including 3,586MW of hydel power, 2MW wind and 3,383MW thermal.
What is the demand and supply situation?
Every year, demand increases by 9-12%. We have to plan for capacity additions, as power generation projects are long-gestation by nature. They take a minimum of four years and some 1,200MW of capacity should be added every year. APGenco will add at least 800MW a year and rest has to come from sources.
What about inordinate delays in obtaining clearances for these projects?
Some get delayed due to land acquisition, environmental issues, fuel tie-ups and legal problems. We have evolved a strategy of preparing ourselves for a 5-10% of reserve margin as cushion. This year onwards, we are planning to add 700-800MW every year till 2015. We have planned for 16 projects involving a cumulative capacity of 8,735MW at a cost of Rs34,746 crore during this period.
What is the status of these 16 projects ?
Ten are under construction, two are in the tendering stage and three are in project development stage.
Is obtaining fuel a key constraint?
For coal-fired projects, we have already completed coal linkage tie-ups. The only project for which fuel tie-up is yet to be achieved is the gas-based 2,100MW project in Karimnagar at an investment of around Rs5,500 crore.
We could not get the gas tie-up so far. I cannot say with 100% certainty as to when will this project take off. The state government is talking to Reliance (Industries Ltd) and ONGC (Oil and Natural Gas Corp. Ltd) to see whether gas would be available at least from 2011-12. Unless fuel is tied up, funding for the project cannot be concluded. In case we are not able to get gas supplies even after two-three years, then we may have to abandon the project.
How about funding for these projects?
Of the 16 projects being taken up at around Rs35,000 crore, we have achieved financial closure for 12 projects involving a capacity of around 5,000MW.
What can lead to delay in the execution of these projects?
One of the serious constraints in power generation is severe shortage of equipment supplies, particularly in the balance of plant equipment that include cooling towers, chimneys, coal plant, ash plant and water treatment plant.
There are three-four good companies in the country at present and they are not able to cope with the sudden spurt in demand. The other constraint is absence of skilled manpower in the area of civil construction. We have severe shortage of carpenters, welders, rod benders and others.
Fuel is a major problem, whether coal or gas. As of now gas availability is a major constraint. In our case, we are not getting new coal supply from Singareni Collieries (Co. Ltd) for the last three years.
As a result, we are getting it from Thalcher in Orissa, which is resulting in increased cost for landed coal owing to transportation costs. The key problem with greenfield projects is land acquisition. Another issue is pertaining to environment, where we are prohibited from acquiring fertile lands for such projects. The second problem is with water.
Are you talking to Reliance to obtain gas for the power projects?
The state government had a couple of rounds of talks with Reliance for gas. The talks are still going on. The first priority would be the existing gas-based power projects of 1,500MW that are lying idle. The other priority sectors would be fertilizers, transport sector, domestic sector and then comes new gas-based power projects.