Union govt lauds Andhra Pradesh for cost optimisation in power purchases

VIJAYAWADA: Even as concerns were raised over procurement of power from markets as the state has surplus energy, the Union government has lauded Andhra Pradesh for saving the most in power purchases through ‘high-level cost optimisation’. The Ministry of Power also said AP is ‘one of the biggest’ buyers of power from market with its purchases accounting for about 16 per cent of its total requirement.

Ahead of the governing council meeting of NITI Aayog to be chaired by Prime Minister Narendra Modi, scheduled on February 20, a meeting was held on Saturday with chief secretaries and secretaries of all states. 

In the meeting, power secretary Alok Kumar is said to have told the NITI Aayog that AP saved the most in purchasing power from spot markets through cost optimisation by replacing sourcing from costlier units. 
The state government till December purchased 6,320 million units out of the 44,665 MU requirement, and accrued savings of Rs 1,023.8 crore. “The state is using real-time market to manage renewable intermittency, and it is the largest seller in the Renewable Energy Certificate (REC) market as well,” the Union secretary mentioned in his presentation to the NITI Aayog. 

The state officials said the average cost of procurement, including transmission charges, was Rs 3.12 per unit as against the approved weighted average procurement cost of Rs 4.55 per unit. “We were able to save Rs 1.43 per and the benefit accrued up to December, 2020 amounts to about Rs 1023.8 crore. AP has now become the best example for other states in procuring cost effective power. In fact, providing interruptions-free power has been dominating the agenda of other states so far. Now they are looking at Andhra Pradesh and started talking about cheap power. This has enhanced the brand image of AP,” a top-ranking official said.

The official claimed that AP was leading the way in cost optimisation of power purchases, which account for about 80 per cent of the total costs of the power utilities.Another official pointed out that AP is one of the two states to have also successfully implemented the reforms proposed by the Centre to enable additional borrowings. 

AP ‘biggest buyer’ 
The Ministry of Power said AP is ‘one of the biggest’ buyers of power from market with its purchases accounting for about 16 per cent of its total requirement