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In a bid to recharge and revive the energy sector in the State, Andhra Pradesh Chief Minister Nara Chandrababu Naidu released a White Paper on the AP Power Sector spelling out the task ahead and the need to implement Power Sector Reforms 3.0 in the State.
Without mincing words, while presenting the White Paper at Amaravati Naidu clearly outlined the challenges that the State faced.
Naidu said, during his recent visit to the National Capital he met several Union Ministers and also put forward Andhra Pradesh’s challenges, however, how much support the Centre will extend has to be seen and factored in.
Tariff burden
In his presentation dissecting the total losses that the sector has incurred between 2019 to 2024, Naidu said the tariff burden on consumers stood at ₹32,166 crore, the Increase in debt of AP Power Utilities stood at ₹49,596 crore, Losses due to inefficient governance was at ₹47,741 crore. In a nutshell, the total losses stood at ₹1,29,503 crore. The inefficient governance category accounted for projects that have been delayed and other components.
Naidu said the challenge before him is to bring down transmission losses and cost of generation and facilitate the transition to hybrid and green hydrogen, making the State future-ready. He sought support from all stakeholders on how to make electricity affordable and flow uninterrupted supply. The target is to revive, restructure, rebuild, he said.
Increased debt
Pointing towards the increased debt of AP Power Utilities between 2019-2024 he said, “Total loans of AP Power Utilities increased from ₹62,826 crore in FY19 to ₹1,12,422 crore in FY24. An increase of ₹49,596 crore (79 per cent increase). Capex loans increased from ₹36,792 crore to ₹46,380 crore in the last five years and OPEX loans increased from ₹26,034 crore to ₹66,042 crore during the period.”
He also pointed towards the short-term borrowings at a higher interest rate of 10.11 per cent to manage cashflows, which meant an additional interest burden of around ₹10,892 crore on short-term loans in the last five years. Outstanding receivables increased from ₹12,945 crore to ₹52,091 crore (as of March 31, 2024), resulting in a net increase of ₹39,146 crore (302 per cent), excluding power dues receivable from Telangana Discoms.
If this was not enough “Additional burden due to short term power purchases is ₹12,250 crore (net of fuel cost),” he said.
Way forward
Talking about the way forward, Naidu said that “Power Sector Reforms 3.0 is needed. There is a need to address the legacy losses of ₹1,29,503 crore, bring back the investors’ confidence and rebuild brand AP, No power cuts, and provide quality and reliable supply at affordable rates.”
Asked if he would be setting up a committee to look into the challenges, he categorically said, “First I would like to set my mind to it. After due review and if there is a need, we may consider.”
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