The proposed handing over of the Operations & Maintenance (O&M) of Sri Damodaram Sanjeevaiah Thermal Power Station (SDSTPS) at Krishnapatnam in Nellore district continues to make employees apprehensive, as by making a statement to that effect in the just-concluded budget session of the Legislature, the government made clear its intention to proceed with privatization of the 1,600-MW plant.
Moreover, State Power Employees’ Joint Action Committee leaders were reportedly told in a recent high-level meeting with the Energy Minister Balineni Srinivasa Reddy and top officials of his department that the privatization of SDSTPS was a matter being dealt with at the Chief Minister’s level.
The employees are, therefore, apprehensive that the government will eventually entrust the O&M of SDSTPS to successful bidders in the wake of submission of multiple reasons (for privatization) in the Legislature by the Energy Minister Balineni Srinivasa Reddy.
It may be noted that SDSTPS was set up by AP Power Development Company Limited (APPDCL), which is a joint venture of AP Genco and four DISCOMs in the unified State of Andhra Pradesh.
Mr. Srinivasa Reddy explained that the variable cost of SDSTPS is ₹3.14 per KWh compared to ₹2.34 per KWh of a nearby Independent Power Producer (IPP), and there is a debt amounting to ₹4,200 crore, which is not recognised by the AP Electricity Regulatory Commission (APERC) and its recovery is difficult due to large inefficiencies in the sector.
Further, the Minister cited the inability of APPDCL to recover the fixed cost that went into the establishment of SDSTPS due to its non-achievement of normative parameters fixed by the APERC, non-recognition of the full capital cost by the APERC, the high costs incurred on unregulated working capital loans and the declaration of APPDCL as a non-performing asset by the Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) consequent to its failure in debt servicing as reasons for considering the proposal to privatize it (SDSTPS).
The modalities of the arrangement being worked out for SDSTPS now include transferring its assets and liabilities also to private companies, continuation of PPAs between APPDCL and the DISCOMs for the existing units (2x800 MW) for the balance period from the date of concession agreement with required modifications approved by the APERC and provision of an unconditional revolving and irrevocable letter of credit for 12 months maintained by the State government towards fixed cost payments allowed by APERC.
