Andhra Pradesh private companies sell power to other states

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Hyderabad: A strange power game is being played out in the state. Around 700 MW worth of private power projects nearing completion, or  recently completed, have no mandate to sell power to the state. Many have already tied up with other states.
Among the projects  expected to be completed soon and commissioned in 2014 are 520 MW Hinduja II and 200 MW Thermotec power project. These are two private projects  with a substantial chunk of the total capacity addition in the near future.
Insiders say these private projects, which had been given a free hand in selling power, are now tying up with other states and can now only be requested to sell power to Andhra Pradesh. In fact, the state has to buy power from the private players, routed through those states, at a higher price.
Currently, the state has a total capacity of roughly 3000 MW from  private power plants,  with no mandate policy for any project to sell power to AP.
The total capacity of APGenco projects stands at 9000 MW. In fact, despite the huge capacity of private projects during the summers, when the deficit was 100 MU per day, the state received almost no power from these plants, and purchased power at three times the price.
Moreover, both these projects have declared themselves as merchant power plants and have participated in bidding process for agreements both within the state as well as outside. As merchant power plants are free to enter into multiple agreements, they are learnt to have entered into tie-ups with states like Tamil Nadu.
“Last year, short-term agreement could not be made as the private projects quoted very high rates. The APERC did not approve the negotiated rates and only 800 MW of additional power could be purchased from southern states in September 2012. Our private plants are selling power to other states and we sometimes buy from those states. Being merchant plants these plants sell power to the highest payer and have no compulsion to sell to AP as they are not bound by policy,” said a Transco official.