Andhra Pradesh Govt seeks delay in signing PPA with NTPC

New Delhi: It will probably take some more time for the State Government and the NTPC to sign the power purchase agreement (PPA) for the upcoming 800 MW NTPC plant at Ramagundam. Since they went into operation, the State Government has signed PPAs for the supply of 1,600 MW (2x800 MW) from the 4,000 MW plant, which was guaranteed by the Andhra Pradesh Reorganisation Act of 2014.

The third 800 MW unit's draft PPA has been sent to the NTPC; however, the central power utilities requested some changes to the draft PPA, so the matter has been referred to the Central Electricity Authority.

The delay in signing the PPA comes after Chief Minister A. Revanth Reddy voiced concerns that, given that it would take four to five years to complete the remaining 2,400 MW (3x800 MW), the cost per unit, which is currently Rs. 5.3, could increase dramatically to over Rs. 8 in the near future.

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By signing a PPA now, the State would be required to purchase 85% of the project's power upon completion, regardless of the cost at that time. Once the agreement is signed, Telangana will be forced to pay the extra expenses.

During the budget session, the Chief Minister informed the legislative assembly that the cost per unit would be decided by the project's capital costs, coal linkage expenses, and profit, making it more expensive. Alternatively, depending on the State's power needs, the State could eventually enter into an agreement with the NTPC.

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In response to the Chief Minister's concerns, the Union Home Ministry stated that since the power plant was built for Telangana State, the State was required to use all of the power produced by the NTPC unit.

During a recent meeting, Union Home Secretary Govind Mohan noted that the Telangana government ought to think about absorbing all 1,600 MW of power produced by the two currently operating units.

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