First of its kind in State Power Utilities in India, the Andhra Pradesh State Power Generation Corporation (APGENCO) has set a novel path to complete the power generation projects much before contract period.
In its initiation, APGENCO Management has taken a key decision to incentive EPC Contract Agencies which would complete projects in advance prior to closure of contract period without requesting Extension of Time (EOT) to the contract. The Management has taken this decision to gain multi benefits in the form of saving Interests During Construction (IDC) and to generate power in targeted period particularly in New Hydro Power Stations and to sell the power to distribution companies to retrieve back investments much early.
As the power reforms are taking new shapes across the world, after the regime of Actual Based Tariff System in the country, State Power Generation Companies are facing backing down of plants problems in intolerable manner financially. On one hand, the Central Electricity Authority of Ministry of Power putting the condition to maintain the average Plant load Factor (PlF) not less than 85% per annum in Thermal Power Plants. On the other hand, the Electricity Regulatory Authorities are restricting power supply prices based on ABT system. In contrast situations, State Power Generation Companies are landing in catastrophic situations and not able to meet the losses and expenditures of Variable Costs of Thermal Plants.
Also, in Andhra Pradesh, for FY 2018-19, the State Government has asked APGENCO to project actual power generation quantities in realistic approach by taking 70% PlF on an average to avoid increase of power tariff while filing Average Revenue Realization (ARR) of Power Distribution Companies (DISCOMs) of the State.
After thorough discussions, the APGENCO Management has taken a decision to incentivize EPC contract agencies of new hydro power stations to control IDC and to get back the investment at the earliest by selling generated power from new hydro stations to Discoms.
To set path, the Management has decided to 50% of saved IDC to the EPC agency of 960 MW (12 x 80 MW) Polavaram Hydroelectric Project, Navayuga Engineering Company-Alstom Joint Venture.
The APGENCO Management Director, K Vijayanand, has categorically clarified the Chairman of NEC, C.V. Rao, not to misuse the incentive offered and also warned if NEC JV fails to complete within Contract period, it would be penalized with 50% of IDC could accrue in the Extension of Time of the Contract. The EPC has agreed to the decision of the APGENCO and promised to complete the Polavaram Hydroelectric Project within contract period.