NEW DELHI: In a significant development that may see the power woes of Northern states easing from July next, REC has set the motion in rolling for early completion of the 1200 MW Teesta Hydel project in Sikkim by increasing its loan sanction to the project to Rs 3,095 crores.
Sikkim Government on its part has appointed a high powered committee to expedite the completion of the State’s hydro power projects, including Teesta-III, and has committed to fund its share of the equity for Teesta-III in an expedited manner.
About 12% of the power produced by Teesta-III will go to Sikkim (as free power per the contract) while the rest 85% supplied to four northern States – Delhi, UP, Haryana and Rajasthan – which recently witnessed serious power crisis due to overdraw from the grid by some states.
Teesta-III, the largest of the six hydel projects on the Teesta river, is being executed by an SPV called Teesta Urja in which the Sikkim Government has a 26% stake.
REC has approved the fresh lending of Rs 995 crores to the project on account of cost over-run. The original estimated cost of the project was pegged at Rs 5,700 crores but lenders like REC and PTC have agreed to increase infuse Rs 8,500 crores to meet cost over runs on account of a massive earth quake, which Teesta-III survived, and so on.
As per revised commercial operation dates, the first unit of Teesta-III will go on stream in July 2013 for Unit-1, thereafter all the six units will become operational one after the other with the sixth and final unit becoming functional by December 2013.
The Sikkim state government has also agreed to bring in its equity share of equity. It is significant that Sikkim Power Secretary Mr A K Giri attended a recent meeting convened by REC.
In a latest development Sikkim Government appointed a high powerered committee under the chairmanship of Chief Secretary Karma Gyatso. State Power Secretary Mr A K Giri is the member secretary of the panel. The government has issued a gazette notification to this effect stating that the committee report is to be submitted by August 10, 2012.
Sikkim government has also signed the share holder agreement with Teesta Urja Limited acquiring 26% stake in the SPV executing the project, apart from agreeing to contribute its share to the base cost as well as the cost overrun.
What comes a major relief to all stake holders is the fact that the State government has decided to end its legal dispute with Teesta Urja on share holding issue and accelerating the project execution.
All equity investors, including a group of six private equity partners, have also expressed their full support and commitment to bring in equity for the revised costs. REC and PTC are among the big lenders to the project.
Six PE players led by Morgan Stanley, who have already pumped in Rs 750 crore into the project through Asian Genco, will also raise their commitment, a source familiar with the development said. “They may have to chip in another Rs 400 crores or so, to proportionately match the cost increase,” the source said.
Besides Morgan Stanley, the group of investors includes Everstone Capital, General Atlantic, Goldman Sachs Investment Management and Norwest Venture Partners.
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APGENCO, which planned to invest in Teesta Urja project in Sikkim, is having second thoughts on investing in equity outside the State.
APGENCO had bagged the O&M Contract for the prestigious 1200 MW Teesta Stage III Hydro Electric Power Project in Sikkim in March 2005 with a possibility of investing in the project. At 3829.40 MW, AP GENCO has the second highest hydel generation in the country
According to original plans, APGENCO was to also participate in equity for the Teesta-III after receiving the techno-economic feasibility of the project.
But now experts have advised APGENCO against going ahead with the non-AP equity plans since in the State itself it would have to invest heavily into power generation. “Better sense should now prevail on APGENO,” said a top power sector analyst.
Meanwhile, the Discom came under increased pressure with AP Chief Minister Mr N Kiran Kumar Reddy asking them to ensure that under any circumstances 7 hours of power supply to farmers. This should be strictly adhered to and there should be constant monitoring on this, he told the Discom officials.
Major Industries in the State are having 30 % power cut as of now, though the officials are making efforts to maintaining power supply to emergency services and small scale units.
APGENCO had also received offers for O&M and equity participation for Rolep (36MW), Ralong (48MW) & Chakung Chu(63MW) projects in Sikkim and some other gas-based projects in South India which is under examination of APGENCO Board.
Government official say APGENCO has now emerged as a National Player for the O&M operations in Hydel Sector extending its boundaries outside the state of Andhra Pradesh for the first time.
Expert opinion, therefore, is that APGENCO should concentrate only on providing its expertise in O&M for other States rather than frittering away its precious resources in equity outside.
This assumes significance in view of the growing power shortages which could go up to 3900 MW (93 million units) in the peak season. The Discoms in the State have floated a tender for purchase of 2000 MW (48 mu) from June to May next year. The Discoms could contract for purchase of only 742 MW, media reports said.
The average demand during May, 2012 was 262 MU per day against 227 MU per day during the same period last year registering an increase of 15.41%. Presently Discoms are supplying around 239 MU/day with a shortfall of 29 MU per day. The Peak demand met during May, 2012 (up to 28th) is 11099 MW against 10474 MW during the same period last year registering an increase of 5.97%.
During 2011-12, as against requirement of 91730 MU, 85149 MU was met resulting in a deficit of 6581 MU (7.2%). Officials said power supply position in Andhra Pradesh is far better compared to many other States in the country.
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