VIJAYAWADA: Accusing the previous YSRC government of pushing the energy sector into a debt trap, Chief Minister N Chandrababu Naidu said the sector sustained total losses to the tune of Rs 1,29,503 crore from financial year 2019-2020 to FY 2023-24. Naidu presented a white paper on the energy sector on Tuesday, the third of the proposed seven white papers.
In his nearly one-hour-long presentation, he elaborated on the multiple tariff hikes levied in the State under the previous regime and said, “Indirect tariff hikes through true-up charges, electricity duty, and fuel surcharge (FPPCA) were imposed on consumers. The total burden on consumers during the last five years is pegged at Rs 32,166 crore, resulting in an overall tariff increase of 21%.”
Stating that he had never heard of such taxes before, Naidu said the receipts from electricity duty that should have been forwarded to the power utilities were taken by the government, which failed to clear its dues to the power utilities. Observing that burden on consumers due to the tariff increase in the last five years is estimated to be Rs 16,699 crore, the Chief Minister pointed out, “A fuel surcharge (FPPCA) of Rs 5,886 crore was recovered from the consumers in FY2023-24. True-up charges of Rs 3,977 crore were also recovered from the consumers in FY2023-24. Increase in electricity duty resulted in a burden of `5,604 crore on consumers during the last two years.”
FIVE-YEAR REPORT
Total loss incurred by power utilities - Rs 1,29,503 crore
Tariff burden on consumers - Rs 32,166 cr
Rise in debt of power utilities - Rs 49,596 cr
Losses due to inefficient governance - Rs 47,741 cr
We will strive to make AP an energy hub, asserts CM
Pointing out that the energy sector is rapidly transforming with technological advancements, Naidu expressed the government’s intention to take advantage of the momentum to address the challenges being faced by power utilities in the State. Stating that the previous TDP governments had introduced power sector reforms 1.0 and 2.0, he underscored the need for reforms 3.0 to transform the sector for empowering the society. “Hence, we are seeking input and support from all stakeholders to make Andhra Pradesh an energy hub in the future,” he added.
Further, Naidu highlighted the significant challenges his government faces in the power sector in terms of addressing the legacy losses of Rs 1,29,503 crore created by the previous government, regaining investors’ confidence and rebuilding ‘Brand Andhra Pradesh’.
“Our primary objective is to provide quality and reliable power at affordable rates to all consumers in the State without any power cuts,” he declared.
Expressing dismay over the gross mismanagement of the power sector by the previous government, he accused the YSRC regime of putting a grave burden on the people of the State and creating a crisis in the energy sector.
The Chief Minister said the previous regime hiked tariff for all consumers by an average of 21% in the last five years to reduce government subsidy. As a result, poor domestic consumers saw tariff hike of up to 98% compared to a 29% increase for middle-class domestic consumers. More than 153 lakh domestic consumers in the State have been affected due to the tariff hike, he added.
Charging the previous YSRC government with pushing the power utilities into a debt trap, Naidu said total loans of power utilities increased to Rs 1,12,422 crore in FY2023-24 from Rs 62,826 crore in FY2018-19, registering 79% spike.
“The capital expenditure (CAPEX) loans increased from Rs 36,792 crore in FY2018-19 to Rs 46,380 crore in FY2023-24. Similarly, the operating expenditure (OPEX) loans of Power Utilities have increased from Rs 26,034 crore in FY2018-19 to Rs 66,042 crore in FY2023-24,” he explained.
Observing that timely realisation of outstanding receivables could have assisted power utilities in meeting their operating expenses, the Chief Minister said, “To manage cash flows, power utilities resorted to borrowing short-term loans at an average interest rate of 10.11%. This led to an additional interest burden of around Rs 10,892 crore.”
On the losses incurred due to ‘inefficient governance’ of the YSRC regime, Naidu said the 55-month delay in commissioning of Unit-8 (800 MW) under stage-V of the Dr Narla Tata Rao Thermal Power Station, and 44-month delay in commissioning of Sri Damodaram Sanjeevaiah Thermal Power Station (Krishnapatnam) resulted in an additional burden of Rs 12,818 crore. The total additional burden due to the delay in the commissioning of Polavaram Hydro Electric Project is estimated to be around Rs 4,737 crore, he added.
Naidu also pointed out that the previous government’s renegotiation of agreements and failure to honour pacts did not only result in the loss of investors’ confidence, but also created legal problems, which saw the government paying them off without even using the power services the State was entitled to.
Amendments to solar, wind, and solar-wind hybrid policies by the previous government, the cancellation of 21 wind power purchase agreements, cancellation of contracts for APTRANSCO (Andhra Pradesh Power Transmission Corporation) works in the CRDA (Capital Region Development Authority) region were among some of the examples Naidu cited to substantiate his claim.
“The decision to back down solar and wind power during the tenure of the previous government has resulted in an additional financial burden of approximately Rs 500 crore on consumers. Currently, this issue is pending before APERC (Andhra Pradesh Electricity Regulatory Commission),” he pointed out.
As of FY2022-23, AP Power Utilities have outstanding government receivables (subsidy dues and department arrears) of Rs 23,572 crore. Instead of clearing these dues, the State government insisted that APGENCO (Andhra Pradesh Power Generation Corporation) and APTRANSCO invest Pension & Gratuity (P&G) Trust Funds and Provident Fund (PF) Trust Funds in AP State Beverages Corporation Limited (APSBCL) bonds. Naidu said APGENCO and APTRANSCO invested Rs 2,134 crore and Rs 379 crore, respectively, in APSBCL bonds at a coupon rate of 8.50%. The total amount invested is Rs 2,513 crore.
Energy sales increased at a rate of just 4.8% from 54,555 MU in FY2018-19 to 69,113 MU in FY2023- 24, one of the lowest in the country, he pointed out. Per capita electricity consumption in State increased by only 123 kWh from FY2018-19 to FY 2022-23 as against the national average of 146 kWh, he added.
RECORDED LOSSES
Delay in commissioning VTPS & Krishnapatnam thermal plants: Rs 12,818 crore
Delay in commissioning of Polavaram Hydro Electric Project: Rs 4,737 crore
Addl impact of short-term power purchases: Rs 2,691 crore
7,000 MW solar power from SECI: Rs 3,850 crore/per year
Interest burden due to borrowings: Rs 10,892 crore
Accumulated losses due to poor performance of APDISCOMs & APPDCL: Rs 9,618 crore
Backing down cost of all generators: Rs 3,135 crore
