HYDERABAD: In a major relief to the AP government, the Supreme Court on Friday asked the GMR Vemagiri Power Generation Limited in the State not to use the costly Regasified Liquefied Natural Gas (RLNG) for generating electricity, observing that the provision was not included in the agreement the company has signed with the AP Transco.
The company that started commercial production in 2007 with an installed capacity of 388 MW has inked a power purchasing agreement (PPA) to sell 370 MW power to AP Transco until 2029. The problem began in 2015 when the company started using the RLNG owing to non-availability of natural gas.
The Union Ministry of Petroleum allotted 1.64 MMSCMD natural gas to Vemagiri from the K-G D6 in 2000, but the GAIL failed to supply the natural gas subsequently and the company was asked to purchase natural gas from the Reliance. Later, it wanted to use the RLNG, which was rejected by the AP government as the cost of RLNG was three times more than that of the natural gas and it led to the litigation.
With the Vemagiri plant started using the expensive RLNG and it had a cascading effect on the cost of production, the APTransco objected the move.
“The AP Electricity Regulatory Commission, in its order issued in 2013, stated that the fuel used in the PPA means natural gas and did not include RLNG. The Vemagiri is not entitled to use the RLNG as the consumers have to pay more for it,” the apex court observed. The SC’s judgement will have a bearing on both AP and TS.
Vemagiri plant was allowed to use RLNG for nine days during a power crisis in 2012.