The Hindu Business Line : Vemagiri Power to modify pact with AP

As per the directions of the Andhra Pradesh Government, Vemagiri Power Generation Ltd (VGPL) has decided to defer its scheduled date of completion of the project and suitably modify its power purchase agreement (PPA) with the Transmission Corporation of Andhra Pradesh (APTransco).

According to an official press release here on Thursday, the company expressed its willingness to accept the proposal of the State Government to delete the provision relating to alternative fuel in the PPA and also to postpone the commercial operation of the project.

In turn, the Government assured Vemagiri Power to make all reasonable efforts to protect the interest of the project by facilitating conclusion of gas supply contract with alternative suppliers and agreeing to enhance the capacity of the power project to 1,000 MW.

The press release stated that the State Government had decided to review the PPAs of eight gas-based power plants in the State, four of which have started operating in the State with a capacity of 999 MW and another four with a capacity of 1,499 MW are in the pipeline and scheduled to commence operations in 2005-06.

The four fast track power plants that have already started operations are GVK, Spectrum, Lanco and BSES (Reliance Energy) and the four projects in the pipeline are VGPL, Gautami Power Ltd, GVK Extension Project and Konaseema EPS Oakwell Power Ltd.

These projects have been conceived to operate on natural gas and have been given firm allocations for supply of natural gas by the Union Ministry of Petroleum and Natural Gas through Gas Authority of India Ltd. Based on these commitments of natural gas, the new projects are in an advanced stage of implementation.

However, according to the Government, the supply of natural gas for the existing plants has been much lower than the firm allocation and that supply of gas for those in pipeline may not materialise unless there is a focused action to ensure supply as per the agreements.

As per the commercial agreements with these power projects, the power utilities in the State will have to pay full fixed charges once the plants are commissioned and declared available, even if the gas is not supplied and power is not generated. This will result in an additional burden of Rs 1,020 crore per annum and at the same time it may not be feasible to pass on this cost to the consumers.

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