ERC's nod for recovery of fuel surcharge may dent AP pocket

Andhra Pradesh may soon have to mop up Rs 8,000 crore in fuel surcharge dues and the state government is scrambling to put together a contingency plan. Appaji Reddem and Animesh Das of CNBC-TV18 report that it has roped in GAIL to import gas to cut production costs.

The Andhra Pradesh government is bracing for Rs 8,000-crore shock. That's the bill will be saddled with if the Electricity Regulatory Commission (ERC) approves the recovery of fuel surcharge, which has been piling up since 2010. While this surcharge recovery has been criticised by the Opposition, the government says it is a regular practice, where additional production charges are passed on to consumers.
Ponnala Lakshmaiah, IT minister, Andhra Pradesh, says that unfortunately or fortunately, 2008-09, it got into court litigation and it was not collected. During 2009-10, it is to the tune of R 1,400 crore in the state which is being billed now. 2010-11, '11-'12 are still with ERC. So, whatever order passed and judgment given, that'll be decided."
But the state government is also pushing to make power cheaper to soften the blow. It is facilitating a re-gasified liquefied natural gas pipeline along the East Coast to import 15 mmscmd of cheap fuel, and make up for short supplies from the KG-D6 basin.
The state has 4,500 MW installed capacity of gas-based power plants worth Rs 22,000 crore sitting idle and this gas is expected to bring down the cost of production from Rs 9 per unit to Rs 6 per unit.
"RLNG can be best utilized. For that, AP government has already consulted GAIL authorities for a two year supply of gas through RLNG can be processed and they'll come back with a proposal shortly. As a matter of fact, they are in Hyderabad, meeting with government officials and honorable chief minister is also meeting them," says Lakshmaiah.
Should it be approved, this bill for surcharge dues will only add to the pain the power scarcity has inflicted on the state. However, the government hopes gas from RLNG through Kakinada and Gangavaram ports should come in within a year. And in the meantime, it is hoping that the monsoons, and hydel energy, will ease the situation.