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Don’t Buy Chattisgarh Athena Thermal: EAS Sarma Writes to AP Govt

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Dr EAS Sarma IAS (rtd)
(EAS Sarma)
I have come across a news report that APGENCO would be buying the stressed Chattisgarh Thermal Power Project of the Athena Group. If the report is true, it will be a highly imprudent decision the part of AP govt, as explained below.
At the national level, excessive commitments have been made on new coal-based power generation capacity, as evident from the enclosed study carried out some years ago by a Pune-based NGO, Prayas. I enclose a copy of the relevant report for Prayas which indicated that, compared to the thermal generation capacity projected by the erstwhile Planning Commission by 2030, commitments made till 2011 had already exceeded it by almost three times. This implies that there will be surplus thermal capacity for years to come, which those in need of it could readily access in the coming years.
The following trends in the average PLF of coal-based plants (source: CEA) in the Southern Region and at the All-India level, corroborate this further.
PLF (%) for December 2019PLF (%) for April-December 2019
ProgrammedActualActual for

previous year

ProgrammedActualActual for

previous year

AP69.1444.8453.6165.6359.4558.41
Southern Region57.2748.1955.2656.3851.7556.46
All India57.9154.459.5459.4355.8460.13
This shows that both in the Southern Region and at the national level, there will be the idle thermal capacity that can be tapped readily.
As it is to be expected, the average PLF of coal-based capacity has consistently been on the decline over the years and, as indicated in the enclosed Financial Express report, it will further decline to 40%. In other words, APGENCO can buy thermal power from several externally located projects, as and when it is needed, at easily affordable prices, on its own terms.
There are other dimensions to the proposed acquisition of the Athena Chattisgarh plant.
On the face of it, the Chattisgarh project is very expensive and it is saddled with huge debt liability. Its equipment is from China and APGENCO may face serious quality problems, as imported Chinese power plant equipment has been posing technical problems in several States. Quality of the Chinese power plant equipment is generally not considered to be up to the established standards. If APGENCO acquires the plant, it will also become heavily dependent on Chinese companies for spare parts etc., which will again impose significant costs.
You may not be aware of the murky past track record of the Athena Group vis a vis APGENCO. To apprise you of the same, I have enclosed here some useful reports on the subject, including my own correspondence with the Central govt investigating agencies like CBI and Enforcement Directorate, RBI and the other departments.
In particular, I request you to see the news report at https://www.firstpost.com/india/teesta-urja-how-sikkim-bent-norms-to-favour-the-powerful-308729.html
When Sikkim govt called for bids some years ago for one of its large hydro-electric projects, namely, Teesta-III, Athena Group which had no experience whatsoever in the power sector, sought to put in its bid. To enable that group to somehow grab Teesta-III, the political masters of AP at that time forced APGENCO to form a consortium with Athena. On that basis, as the enclosed Sikkim court judgment also indicates, APGENCO-Athena consortium succeeded in securing the order for Teesta-III. Once that group obtained the order in its hand, it conveniently jettisoned APGENCO from the deal and took over Teesta-III in conjunction with a controversial Singapore-based company, Asian Genco.  APGENCO could not lodge its protest as it was not allowed to do so by the same political masters who forced it earlier to join hands with Athena. For APGENCO now to acquire the Chattisgarh Athena project would thus ironically imply repeating the past sin of listening to the political masters to the detriment of its own interest.
I may also mention that the same Athena Group is also involved in the scam-ridden coal-based power project located near Bhavanapadu, promoted by East Coast Energy Pvt Ltd (ECEPL). It appears that funds obtained by that company (Athena was one of its promoters) have been siphoned off, leaving the PSU banks in the lurch. ECEPL has also become bankrupt.
Athena’s track record elsewhere has not been enviable.
I understand that APTRANSCO has agreed to buy Athena power provided that the delivered cost of electricity at its terminal does not exceed Rs 3.80 per unit. How is APGENCO going to comply with this condition? If APTRANSCO refuses to accept Athena power, would not the latter become a millstone around its neck?
Against this background, I would caution you and APGENCO to be wary of this deal which is riddled with several controversies. I get the feeling that there is an undesirable vested interest that is driving this deal. Senior civil servants should ensure that APGENCO, which is one of the best power utilities in the country, does not get dragged into this. It got hurt once before. It should not get hurt again.

 

prayas report

(Text of the letter EAS Sarma, former Energy Secretay, GOI wrote to N Srikant,Secretary, (Power),Govt of AP)