Hinduja Group to Operate Vizag Power Plant at Full Capacity.

Hinduja Group’s Hinduja National Power Corporation Ltd (HNPCL), one of the two major independent power producers in Andhra Pradesh, aims to resolve all pending issues with the state government to operate its Vizag power plant at full capacity.

The group ventured into the power sector by setting up a 1,040-MW coal-based merchant power plant in Visakhapatnam. The plant was shut down for a year and a half between July 2020 and March 2022 and resumed operations following a Supreme Court order.

In accordance with the Supreme Court's direction, the Andhra Pradesh Electricity Regulatory Commission (APERC) approved the Power Purchase Agreement and the project cost for Hinduja Power. However, sources indicate that certain "key cost events" and "elements in the project execution" were overlooked. These discrepancies have been challenged in the Appellate Tribunal for Electricity (APTEL), with the appeal still pending.

“This has led to the plant running at a lower capacity load than optimal, impacting investor sentiment in the state,” a source told businessline.

Rumors had circulated about the group potentially exiting the project due to the closure and cost issues. However, another informed source dismissed these rumors, stating, “Hundreds of crores have been spent on the project, and entering the power sector has been part of the group strategy. Where is the question of exit?”

Thermal Powertech and Hinduja Power are the two independent power producers consistently supplying power to the state, with tariffs below ₹5 per unit, according to the source. NTPC Simhadri Stage 1 and Stage 2 are central gencos that also supply power to the state. Hinduja Power and Thermal Powertech are operating at 60 to 80 percent capacity.

Regarding HNPCL's strategy to efficiently run the plant amidst political challenges, another source noted, “The total power capacity of Andhra Pradesh is approximately 19,800 MW. Efficient management of the capacity should ensure no short-term/bilateral purchases.”

Andhra Pradesh discoms' receivables are at an all-time high of ₹52,000 crore, with about 25 percent from state government subsidies, 30 percent from other government departments, and another 30 percent through true-up/fuel surcharges.

The high level of outstanding amounts payable to AP discoms is resulting in higher levels of trade payable to gencos and transcos. “As a result, gencos are unable to pay for coal, transportation, maintenance, and operations. If the AP discoms can pay the dues on time to gencos, the gencos can increase power generation and avoid the need for discoms to resort to the short-term/spot market at an average of ₹7-8 per unit,” an industry player explained, emphasizing that the “onus is on the state political leadership to create a conducive environment for the smooth flow of electricity by resolving issues.”

HBL