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Andhra Pradesh government orders reverse tender for Polavaram hydel project

Polavaram hydel project, which according to the recently RCE is estimated to cost Rs 4506.91 crore, was awarded to NECL in December 2017.

Published: 04th July 2019 07:26 AM  |   Last Updated: 04th July 2019 01:53 PM   |  A+A-

Andhra Pradesh CM Jagan Mohan Reddy

Andhra Pradesh CM Jagan Mohan Reddy. (Photo | EPS)

Express News Service

VIJAYAWADA:  The YS Jagan Mohan Reddy government has not only begun work to renegotiate or review renewable Power Purchase Agreements (PPAs) signed during the TDP regime, but also decided to scrap other contracts, including that of the Polavaram Hydroelectric Power (HEP) plant. Executing agency of the 960 MW HEP,  the Andhra Pradesh Power Generation Corporation (APGENCO), has been entrusted with the job of cancelling the existing tender and conduct reverse tendering so that a new contractor would be in place by October 1.

Sources confirmed to TNIE that the State government decided to scrap the contract for the Polavaram hydel project awarded to Navayuga Engineering Company Ltd (NECL) at the review meeting on energy department held by Chief Minister YS Jagan Mohan Reddy on June 26. “The State government has taken a decision to go in for reverse tendering for the 960 MW -- 12 units of 80 MW each -- Polavaram HEP by cancelling the existing contractor. We will start the process and examine how to execute the government’s decision,” a top-ranking official told TNIE.

The project, which according to the recently revised cost estimates (RCE) is estimated to cost Rs 4506.91 crore, was awarded to NECL in December, 2017. However, work on HEP hasn’t taken off as the contracting firm is also looking after the Polavaram irrigation project head works. Navayuga had planned to launch major works of HEP in the last quarter this year and commission it by 2021-22.

Not just the Polavaram HEP, the energy department, on the directions of Jagan, also decided to review two other major projects: Stage V (800 MW) of Dr Narla Tatarao Thermal Power Station (Vijayawada) and Stage II (800 MW) of Krishnapatnam Thermal Power Plant. Both were to be commissioned by last month, but missed the target. They will now be examined by a committee for ‘evaluation and justification’ of capital costs by comparing them with projects in other States. Final call on the future course of action will be taken after the committee submits its report, sources said. “The committee has been constituted and they will submit the report in a month,” another official in the know of things revealed.

Besides these, the government, which recently appointed a high-level negotiation committee to renegotiate and review the renewable PPAs, has ordered that recovery notices be issued to all wind and solar firms for the loss caused to DISCOMS and the exchequer. The Chief Minister, at the review meeting, alleged that the PPAs were signed at exorbitant rates causing a loss of Rs 2,636 crore.

As for the projects in the pipeline, the government, it is learnt, wants to cancel them all. It means 21 wind PPAs, and projects, including Siemens Gamesa (600 MW) hybrid, Axis Energy Hybrid, and energy storage projects, will be scrapped. “Cancel all the wind, hybrid and experimental PPAs, which are in pipeline -- either not signed or not cleared by the AP Electricity Regulatory Commission (APERC),” the order said. The New and Renewable Energy Corporation of Andhra Pradesh (NREDCAP) has also been directed to cancel the allocation of 5,000 acres of land allotted to Greenko’s solar-wind hybrid project in Anantapur. 

In line with the vision of renewable energy

Conscious that the cancellation of renewable projects might result in power shortage, officials concerned were advised to keep thermal plants and ‘other sources’ on standby. The installed capacity of renewable power -- wind and solar -- in the State is about 7,000 MW. The government plans to take it to 18,000 MW by 2022 in line with the Centre’s vision to add more renewable energy to the country’s power sector.

A communication detailing the above decisions has already been sent to the APTRANSCO, APGENCO, DISCOMS, Andhra Pradesh Power Coordination Committee, NREDCAP and other agencies, making it clear that “(the decisions) are communicated for taking action and reporting compliance.” Given this direction, it remains to be seen what exactly will be the role of the high-level committee formed to renegotiate the PPAs. For the record, the Union Ministry of New and Renewable Energy’s Secretary Anand Kumar, on June 6, had written to the Chief Secretary to advise the Chief Minister not to renegotiate the PPAs stating that a contractual agreement ‘should not be revisited unless there is a specific provision to do so in the agreement or a case of conspiracy and undue gains is proved’. He further cautioned that revisiting the contracts would shake investors’ confidence and adversely affect future investments. 

Agreeing with the Secretary’s views, a representative of the Solar Power Developers’ Association (SPDA) told TNIE, “Cancelling projects or agreements will create trust deficit among the investors. The decisions so far by the AP government have been internal. We will take a decision on what needs to be done once it serves notices or takes tangible action.” 

Energy dept to review 2 major projects
The energy department, on the directions of Jagan, also decided to review two other major projects: Stage V (800 MW) of Dr Narla Tatarao Thermal Power Station (Vijayawada) and Stage II (800 MW) of Krishnapatnam Thermal Power Plant.

Rs 4,506 crore estimated cost of Hydroelectric project
The Polavaram Hydroelectric Power project, which, according to the recently revised cost estimates (RCE) is estimated to cost Rs 4506.91 crore, was awarded to NECL 
in December, 2017.

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