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Sri Damodaram Sanjeevaiah Thermal Power Plant – Why involve a private company in its O&M, asks EAS Sarma

EAS Sarma, a retired IAS officer and campaigner, questioned the AP government’s decision to hand over the O&M of Sri Damodaram Sanjeevaiah Thermal Power Station. He said APGENCO is working very well and it is the best bet to run the thermal plant. If operations are outsourced to a private company that has overseas mines under its control, the cost of production would be increased by manipulating the coal import bill. He warned the government not to trust a private company instead of handing over the project to APGENCO. Here is the full text of the letter the former Union Power Secretary wrote to the PA Chief Minister.

Sarma EAS

Former Union Power Secretary

Visakhapatnam

To

Shri YS Jaganmohan Reddy

Chief Minister

Andhra Pradesh

Dear Shri Jaganmohan Reddy Garu,

I understand from press reports that the state government is considering outsourcing the operation and maintenance of Sri Damodaram Sanjeevaiah Thermal Power Station (SDSTPS) to a private company. If these reports are correct, I fear the decision could be detrimental to the interests of the state and its consumers.

It is sad that I am raising this issue on the very day that you are “dedicating” the 800 MW unit of the Phase II power project to the nation!

From what I understand from news reports and other sources, the state government is considering a well-known and preferred private business house, through a highly non-transparent procedure, to take over the O&M of the power station. I would not be surprised if this same business house also owns coal mines overseas and will supply coal from those coal mines to the power station, which has been cleared for a mixture of indigenous/imported coal. In the past, all of these Indian private groups supplying coal to national power plants faced allegations of overcharging for coal and false demands for electricity tariffs for money laundering. Investigations have been carried out by the Directorate of Law Enforcement and others against them. In this context, if one of these companies operated the SDSTPS, it is possible that AP consumers would be forced to pay for the electricity produced from overcharged coal!

APGENCO is perhaps the most successful production company in the country and the best alternative for the State would have been to entrust the operation of the SDSTPS to this public utility. Nobody else can run the plant at higher levels of efficiency.

The state government should consult with APGENCO on ways and means to reduce the cost of coal supplied to the SDSTPS and improve its operational efficiency to minimize the unit cost to consumers, instead of contracting out the plant to a company private to allow this business. benefit to the detriment of consumers.

Can I therefore demand that the state government drop its proposal, if any, to contract out the operation and maintenance of the SDSTPS to a private company and, instead, ask APGENCO to take it over?

Handing over the O&M of the SDSTPS on the basis of an appointment to a private party will be an offense under the Prevention of Corruption Act and I will be compelled to seek judicial intervention in the event that your government is stubborn enough to commit such an offence.

Cheers,

Cordially,

Sarma EAS

Visakhapatnam

27-10-2022