COPY OF LETTER BY ANDHRA PRADESH CHIEF MINISTER TO UNION POWER MINISTER

 

Dr. Y.S. RAJASEKHARA REDDY                                                            HYDERABAD

 CHIEF MINISTER

ANDHRA PRADESH

 

                                                                                                                       Dt. 19-05-2005

 Dear Sri Sayeed Ji,

             Please recall our discussion on the issue of trasfer of bulk supply and trading business from the state Transmission Utility to the Distribution Companies by 10^th  June, 2005.

             As you are fully aware, scarcity of fuels such as gas and coal has lead to under utilization of the installed generating capacity in our state, and is severely hampering future capacity addition also.  Such scarcity is expected to continue for a few more years.  The objective of competition and consequential reduction in prices through the introduction of the Multi-Buyer model will not be achieved in the current circumstances of shortage of power. On the other hand, increased competition in a shortage situation will push-up the cost of power.

 Further, unlike other states, Andhra Pradesh has entered into Power Purchase agreements (PPAs) with private power projects and the manner in which these PPAs are to be allocated requires careful consideration, as such allocation in irrevocable.

 In the circumstances explained above, it is requested that the Government of    India may extend the time frame for separating bulk supply and trading business from the State Transmission Utility by one more year. 

I reiterate that the State Government of Andhra Pradesh is committed to reform in the power sector, and we will continue to support reforms which are in the larger interest of the consumers, the utilities and the Government.

 

With regards,

                                                                                    Yours sincerely

 

                                                                                                SD/-

 

                                                                        (Dr. Y.S. Rajasekhara Reddy)

Sri. P.M. Sayeed,

Union Minister for Power,

Ministry of Power,

NEW DELHI