Power Crisis in AP

Andhra Pradesh’s power utility company, APTransco, purchased power worth Rs 6500 crores. This was about one year ago. Meaning, a year ago, APTransco was buying power worth Rs 18 crores per day. Today, APTransco is purchasing power worth less than Rs 1 crore per day. Last year, the gargantuan amount of money spent to purchase power was to woo the electorate. Today, APTransco is in desperate need for more funds.

Free current to farmers and power at reduced tariff to industries have taken their toll on state government’s treasury. These are probably good moves by the government but only until they have the financial ability to do so. Now that the state government’s finances no longer allow the luxury to buy power at will, it has resorted to power cuts.

A few months ago, APTransco requested for tenders from other states and power trading companies to purchase power. The average cost quoted by the companies was Rs 4 per unit. Now, it is approximately Rs 7 per unit and AP state government has agreed to buy 500 MW per day. Considering that the rabi season ends in March, this is necessary to save the rabi crop. But this will deplete the state’s cash reserves even further.

Even industries have not been exempted from power cuts. Already, few industries remain closed one day in a week due to power shortage. This might increase to two days for a few weeks affecting production targets of many industries.

The main reason for this power shortage is the drop in the reservoir levels leading to a lower power generation by hydel projects. Unfortunately, the thermal power projects are not able to make up for the loss in hydel power. In the next few months, the reservoir levels are going to fall even further leading to an acute power shortage.

Currently, there is a shortage of 20 million units per day. At a rate of Rs 7 per unit, AP state government would have to spend about Rs 14 crores per day to bridge the gap between demand and supply. During peak summer, the demand for power and cost per unit might also go up. Even if APTransco gets this kind of money, it might not be able to buy power from other states as almost all the grid space has been reserved by Karnataka and Tamil Nadu.

Every year, the demand for electricity increases by approximately 10% in the state. This year, it is expected to be 13%. A record level of 255 million units of power consumption was already recorded in Andhra Pradesh on March 6th and this is only the start of summer. In April and May, power consumption by residential users will increase in leaps and bounds. With a current demand supply gap of 4.3% and with no neighbouring state having a surplus to help us, are we heading for a major power crisis in the next few months?

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