Hinduja Group to run Vizag power plant at full capacity

After restarting the power plant in 2022, Hinduja Group’s Hinduja National Power Corporation Ltd (HNPCL), one of the two major independent power producers in Andhra Pradesh, hopes to resolve all pending issues with the State government in order to run full capacity.

Making its foray into the power sector, the group had set up a 1,040-MW coal-based merchant power plant at Visakhapatnam. The plant was shut for a year and half between July 2020 and March 2022 and operations were restarted after a Supreme Court order.

In line with the Supreme Court direction, Andhra Pradesh Electricity Regulatory Commission (APERC) arrived at and approved the Power Purchase Agreement and the Project Cost of Hinduja Power. But, according to sources, certain ‘key cost events’ and ‘elements in the project execution’ were ignored. These calculations have been challenged in Appellate Tribunal for Electricity (APTEL) and the appeal is pending.

“This had led to the plant running at lower capacity load than the optimal, and impacting the investor sentiment in the State,” the source told businessline.

The closure and cost issues also led to rumours that the group may exit the project. Dismissing all rumours another source in the know said: “hundreds of crores have been spent on the project and entering power sector has been part of the group strategy. Where is the question of exit?”

In fact, Thermal Powertech and Hinduja Power are the two independent power producers that are consistently supplying power to the State. “The tariff of the IPPs is less than ₹5 per unit,” the source added.

NTPC Simhadri Stage 1 and Stage 2 are Central Gencos that supply power to the State. Hinduja Power and Thermal Powertech produced power between 60 per cent to 80 per cent capacity.

Asked how HNPCL proposes to efficiently run the plant, given the politics the sector is embroiled in, another source said: “total Power capacity of Andhra Pradesh is approximately 19,800 MW. Efficient management of the capacity should ensure no short-term/bilateral purchases.”

Discoms’ receivables

Andhra Pradesh discoms receivables are at an all-time high of ₹52,000 crore – about 25 per cent of receivables are in the form of subsidy from the State Government; about 30 per cent from other Government Departments, and another 30 per cent by way of true-up/fuel surcharges, the source said.

The high level of outstanding amounts payable to AP discoms is resulting in higher level of trade payable to Gencos and Transco. “In turn, Gencos are unable to pay for coal, transportation, maintenance and operations. If the AP discoms are in a position to pay the dues in time to Gencos, the Gencos in turn can increase generation of power and obviate the need for discoms to go to the short term/spot market at an average of ₹7/8 per unit,” an industry player said adding that the “onus is on the State political leadership to create a conducive environment for smooth flow of electricity by resolving issues.”