Here is KCR’s explanation of his decisions on Telangana’s power sector

KCR gives a point by point rebuttal of the allegations levelled against the previous BRS government in connection with the power sector.

Hyderabad: Leader of Opposition and BRS president K Chandrashekhar Rao on Saturday gave a point by point rebuttal of the allegations levelled against the previous BRS government in connection with the power sector. In his reply to the notice served upon him by the Justice L Narasimha Reddy Commission, he explained in detail on why decisions on each of the issues, from the use of sub-critical technology for Bhadradri Power Plant, to the contract being given to BHEL, the power purchase agreement with Chhattisgarh and the location of the Yadadri Power Plant, were taken.

Sub-critical technology at Bhadradri

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There was no restriction or ban on use of Sub-Critical technology and it was asserted that Sub-Critical technology could be used till 2017. Nearly 90 per cent of thermal stations in the country were of sub-critical technology by 2014 when Telangana was formed. The Kothagudem Thermal Power Station (KTPS) – 1720 MW, Kakatiya Thermal Power Plant at Bhupalpally (KTPP- 500 MW), Ramagundam Thermal Power Plant (RTPP-62 MW), Vijayawada Thermal Power Plant (VTPS-1760 MW) were of Sub-Critical technology. On the whole in the country, only one or two were of Super-Critical technology. The Government had enquired with BHEL whether it could supply power stations, in view of the urgency. The BHEL told the government that it had equipment ready to set up a Sub-Critical technology driven power stations. They suggested that they could built 1080 MW Bhadradri Power Plant in two years with Sub-Critical technology, but could build the proposed 800 MW station in Kothagudem seventh phase with super-critical technology in four years. Based on this and in view of the severe power crisis, it was decided to set up the Manuguru power station with sub-critical technology.

Why BHEL

The Negotiations Committee of Telangana Genco had calculated and reduced the capital expenditure by Rs.400 crore and only after the BHEL agreed to this, Bhadradri works had commenced. The BHEL was given the contract on nomination basis for Bhadradri power plant in view of the latter’s assurance to complete the construction in two years and also in view of the dire necessity of power. My party policy was to encourage government run organisations and hence BHEL was chosen on nomination basis. It is also fact that BHEL is the only organization in the country to build thermal, hydro or nuclear power stations. Though companies like Toshiba and Hitachi made an advent with super-critical technology, they could not survive for long. It is perfectly legal to resort to nomination or tender method when a project is to be given to a government–run organization like the BHEL. Many central organisations, Gencos of different States, NTPC and several private companies also accorded contracts to BHEL on nomination basis.

PPA with Chhattisgarh

At the time of State formation, Telangana was not connected to the national grid and was only in the Southern grid. Power was not available in Southern grid, but Chhattisgarh had surplus power. Power utilities held talks with Chhattisgarh, which expressed readiness to supply 1000 MW or 2000 MW also. Initially, an MoU was signed on November 3, 2014 for 1000 MW. However, there were no transmission lines to supply power from Chhattisgarh to Telangana. At that time the Power Grid Corporation of India Limited (PGCIL) had begun construction of Wardha-Dichpally line. The government held talks with PGCIL and cooperated with it through land acquisition. At the same time, there was heavy demand to book power corridor on this line and Telangana was also forced to book the corridor. Telangana needed a dedicated corridor to get power from Chhattisgarh. The PGCIL wrote to Telangana on 8-6-2016 that unless a Line Transmission Agreement (LTA) was signed, a dedicated line could not be granted. To get this LTA signed, the government had to submit the Power Purchase Agreement (PPA) with the power seller. The PGCIL had also stipulated a first-come-first-served basis in booking the corridor. In view of this, Telangana was forced to book a dedicated corridor considering the open market power purchases and the resultant demand for power. To bring Telangana out of power crisis, there was no other go for the government but to have a PPA with Chhattisgarh and submit it to the PGCIL to book the corridor. The PPA between Chhattisgarh and Telangana was ratified by the ERCs of both the States.

Telangana did not pay more

In 2014, when Telangana had a PPA with Chhattisgarh, Tamil Nadu also made a PPA through tender basis at a unit rate of Rs.4.94. In the same year Karnataka also opted for a PPA through tender basis at a unit rate of Rs.4.33. NTPC Simhadri in the united Andhra Pradesh had also made a PPA on nomination basis. So how can one deduce that Telangana paid heavy cost with its PPA at Rs.3.90 unit price with Chhattisgarh?

Yadadri power plant at Damarcherla

Selection of the plant site is the prerogative of a State Government which would consider various issues. All the major power plants in Telangana are on the banks of River Godavari. KTPS in Kothagudem, Singareni plant in Jaipur, Ramagundam NTPC, another plant being set up after bifurcation by NTPC and the Bhadradri plant are all on Godavari banks. There is no single plant in South Telangana districts of Mahabubnagar, Ranga Reddy and Nalgonda districts. Governments are to strive for equality of economic development and hence the Telangana government decided to set up the Yadadri Power Plant in the backward Damarcherla area of Nalgonda district, where sufficient lands were available even for future expansions or even setting up a solar plant also.

Another compelling reason is its proximity to Krishnapatnam and Bandar ports which could enable Damaracherla project to import coal, if there was any problem in coal supply. The coal supply is predominantly from Singareni Collieries, but the Central government reserves the right of coal allocation. Damaracherla also has proximity to National Highway and also a railway line thereby obviating any transport problems. It also has locational advantage for power supply either from Nagarjuna Sagar or from the tail pond. Another major advantage is the presence of cement industries around Damaracherla for use of fly ash generated by thermal power plant. This fly ash cannot be discarded and can be used only by cement industries, which have given it in writing that they would utilize the fly ash generated in Damaracherla plant.

One of the terms of reference is also cost of coal transport and coal linkage. If coal transport cost is the issue, why was the Muddanur power plant (RTPP) in Rayalaseema built 580 km away from coal mines? Similarly Vijayawada thermal plant was set up some 800 km away from Talcher coal mines. Why were thermal plants set up in Jajjar of Haryana, Govindwala Saheb in Punjab, Rayachur and Bellary in Karnataka, and Mettur in Tamil Nadu, which were all very far from coal mines.