A white paper on Western Australia’s energy sector reveals the government’s burden is Rs 1.29 lakh crore.

Stating that the TDP-led NDA government has inherited serious challenges in the power sector in dealing with losses of ₹ 1,29,503 crore caused by the previous YSR Congress Party (YSRCP) government, Chief Minister Nara Chandrababu Naidu said he would restore investors’ confidence and rebuild “brand Andhra Pradesh”.

Releasing a White Paper on the Status of Power Sector at the Secretariat on July 9 (Tuesday), along with Energy Minister Gottipati Ravi Kumar, Mr Naidu slammed former Chief Minister YS Jagan Mohan Reddy for “imposing an unbearable burden of power tariffs” on domestic consumers.

Mr. Naidu explained that policy paralysis, unconventional and hasty decisions, mismanagement and abrupt termination of power purchase agreements are some of the major reasons for the huge losses. The total loss of ₹1,29,503 crore includes tariff burden on consumers of ₹32,166 crore, increase in debt of power companies by ₹49,496 crore and losses of ₹47,741 crore due to inefficient management.

Power sales increased from 54,555 MU in FY 2018-19 to 69,113 MU in FY 2023-24 at a growth rate of 4.8%, which is one of the lowest in the country. Per capita electricity consumption in AP increased by only 123 kWh from 2018-19 to 2022-23 as against a growth of 146 kWh at the national level. This was mainly due to a sharp increase in tariffs and reintroduction of power cuts due to poor planning, which impacted the state’s GSDP, the Chief Minister explained.

Power outages

DISCOMs (distribution companies) have resorted to power cuts for the year 2022-23 for domestic consumers due to lack of planning for power purchases. This was due to deliberate delay in commissioning of Polavaram hydropower project (960 MW), SDSTPS (Krishnapatnam) Stage-II Unit-3 (800 MW) and VTPS Stage-V Unit-8 (800 MW). These measures were applicable to all categories of consumers, including rural domestic consumers, with power cuts of one hour per day during the day, 30 minutes per day for urban domestic consumers, up to 12 hours for continuous industrial processes, up to 15 hours for non-continuous industrial processes, up to 12 hours for commercial consumers and up to two hours for agricultural consumers, he said.

Investments in APSBCL

In 2022-23, AP power utilities had outstanding government dues (subsidy dues and departmental arrears) of ₹23,572 crore. Instead of repaying them, the state government insisted that APGENCO and APTRANSCO invest Pension & Gratuity (P&G) Trust Funds and Provident Fund (PF) Trust Fund in AP State Beverages Corporation Limited (APSBCL) bonds. Both the companies invested ₹2,134 crore and ₹379 crore, respectively, in APSBCL bonds at a coupon rate of 8.50%. These bonds were guaranteed by the government.

In July 2019, the government had set up a High Level Negotiating Committee (HLNC) to review, negotiate and reduce the tariffs of the already-executed wind and solar power purchase agreements (PPAs). This was challenged by developers in the High Court, which directed the DISCOMs to pay an interim tariff of ₹2.43 per unit for wind projects and ₹2.44 per unit for solar projects in lieu of the PPA tariff. In March 2022, the court directed the DISCOMs to make payments as per the tariffs in the PPAs. To settle the outstanding dues to wind and solar developers, the DISCOMs resorted to working capital loans to the tune of around ₹9,000 crore.

Mr. Naidu announced that the government would not take any drastic decision that could break the confidence of investors. He appealed to all stakeholders to support Andhra Pradesh to become the energy hub of the future.