APGENCO placing coal import order on the Adani Group raises serious concerns

coal

To

Shri Y S Jagan Mohan Reddy

Chief Minister

Andhra Pradesh

 

Dear Shri Jagan Mohan Reddy garu,

I understand that Andhra Pradesh Power Generation Corporation (APGENCO) has placed an order for 7.5 lakh tonnes of imported coal for the Damodaram Sanjeevaiah TPS (DSTPS) at  Krishnapatnam, by selecting the Adani Group as the successful bidder at a quoted price of Rs 13,500 per tonne, which is more than Rs 4,500 per tonne compared to what one should expect for importing coal of a comparable quality in the normal course. The excess burden on this account would be around Rs 338 Crores (https://www.eenadu.net/telugu-news/ap-top-news/general/2501/123041062).

To the best of my understanding, the units at DSTPS are designed to operate on indigenous coal and the use of imported coal could have some impact on its efficiency. In addition, had APGENCO been able to obtain adequate supplies of indigenous coal, it would have saved more than Rs 600 Crores.

I feel that there has been a continuing mismanagement on the part of the concerned Central agencies in fulfilling their commitments to produce enough coal and transport it to the generation plants of the States.

For example, the Ministry of Coal, instead of enabling CIL to ramp up coal production from existing and new sites, stripped CIL of its greenfield coal blocks  and auctioned them to private companies, some of whom own coal mines overseas. Had CIL been allowed to retain its internal resources fully, without having to divert the same as huge dividends to fill the Centre’s fiscal gap and had CIL been encouraged to develop its greenfield deposits, the present coal crisis would not have arisen. Compounding this has been bottlenecks in railway transportation of coal.

Instead of owning its mismanagement, the Central Ministries have been ordering the State utilities to import coal to a certain minimum extent, in a way creating scope for Indian private companies owning overseas coal mines to exploit the crisis and charging astronomical prices from the hapless State power utilities. The Ministry of Power, which has been issuing one diktat after another to the State utilities, exceeding its statutory jurisdiction, does not even seem to care for the efficiency losses suffered by the State generating plants in using imported coal for which their equipment is not designed. Such efficiency losses have cost implications.

While these extra costs cripple APGENCO’s and DOSCOMs’ finances, it places an additional heavy burden on us, the consumers!

I feel that the State government, on behalf of APGENCO which is already reeling under a financial crunch, should ask the Centre to bear the extra cost burden arising from forced coal imports. This is a legitimate claim to be made by the State.

In addition, I am not sure whether APGENCO being forced to place an order for imported coal on the Adani Group is an instance of mere coincidence, or a part of the overall picture emerging in Andhra Pradesh.

The State has willingly allowed two strategic ports, Gangavaram and Krishnapatnam, to slip into the hands of the same Adani Group. Without calling for tenders, the State has allotted many pumped storage projects to the same group, involving allotment of land, water, forests etc. at concessional prices, some in gross violation of the PESA Act and the Forest Rights Act. As if this is not enough, the State is handing over maintenance of some of APGENCO’s power plants to the Adani Group, unmindful of the fact that APGENCO continues to be a far more experienced and competent agency. AP has also allotted solar plants to the Adani Group, without caring to promote decentralised solar generation based on solar irrigation pumpsets and rooftop panels, which would have given additional income to the consumers. The Adani Group has also been allotted huge stretches of land at concessional prices in Visakhapatnam and elsewhere. All these, if not merely coincidental, call for an independent enquiry, as these are matters of public interest.

I hope that the State will immediately ask the Centre to bear the additional cost of coal imports.

Regards,

Yours sincerely,

E A S Sarma
Former Secretary to Government of India
Visakhapatnam

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