All India Power Engineers’ Federation (AIPEF) chairman Shailendra Dubey wrote a letter to Chief Minister Y.S. Jagan Mohan Reddy, requesting him to withdraw the decision taken by the Cabinet to entrust the Operations and Maintenance (O&M) along with transfer of assets of the Sri Damodaram Sanjeevaiah Thermal Power Station (SDSTPS) to other companies for 25 years.
“Any provocative steps on employees and engineers in the power sector will be viewed seriously by the AIPEF,” he said.
Mr. Dubey stated that the Cabinet had cleared the proposed handing over of the O&M of the SDSTPS to ‘capable companies’ by comparing its variable cost with that of an adjacent private power project, and keeping in view the accumulated losses (of SDSTPS).
He observed that SDSTPS is under the control of Andhra Pradesh Power Development Corporation Limited, a subsidiary of the AP-Genco. The Stage-I (2×800 MW) units have been in operation for the last seven years and the third one is ready to begin commercial operation. “Handing over their O&M to third parties at this juncture is contrary to the spirit with which the Government of Andhra Pradesh opposed the privatisation of Visakhapatnam Steel Plant (VSP),” he said.
Competitive bidding
The argument that the variable cost of ₹3.14/kWh of SDSTPS is higher than that of the said private generator (₹2.34/kWh) is not justifiable as most of the IPPs came under Design, Build, Finance, Own and Operate (DBFOO) mode through competitive bidding with certain favourable provisions in the CERC regulations.
It is not correct to compare two different tariffs determined by different regulations, and SDSTPS has no Letter of Credit (LC) i.e. advance payment mechanism (it would help reduce the variable cost by facilitating the maintenance of sufficient coal stocks and in running the units at no loss by maintaining the required normative availability).
Moreover, he said, the variable costs differ from one generator to another on the basis of designed parameters. There are multiple factors which the Cabinet should have taken into consideration before deciding to hand over the O&M of SDSTPS to other companies, Mr. Dubey said, adding that apparently no proper thought was given to the issue.
