APGENCO Headed For Bankruptcy

Font Size

Print

Feedback

Email

Discuss

Andhra Pradesh Power Generation Corporation Limited (APGENCO), the holding company for the states’ generating assets, is headed for bankruptcy unless the state government changes its policies towards the organisation.

APGENCO feels that instead of making profits in the region of Rs 300 crore, the present pricing policy adopted by the state government would result in the company incurring losses of over Rs 2,000 crore by 2006. If one were to take all the losses, that is, revenue as well as book losses, the total loss would be over Rs 4,000 crore.

APGENCO currently has a negative rating and this is hampering its future expansion programmes. An appeal to rescue the corporation has already been made by APGENCO to the regulator and chief minister N Chandrababu Naidu this week.

APGENCO came into existence in 1998-99 after the erstwhile AP state electricity board was split and corporatised into three entities with APGENCO handling the generation assets while transmission and distribution under APTRANSCO and distribution companies respectively (the revenue side of the business). The entire hydel and thermal power assets under APGENCO amounting to close to 5,000 mw make it one of the largest state government- owned power generating companies in India.

Speaking to FE from Hyderabad on the current situation, former power secretary and currently Principal of the Administrative Staff College of India, EAS Sarma, said the state government should create a level playing field for APGENCO, which is also one of the most technically efficient organisations.

Some of the costs that have been loaded on to APGENCO’s balance sheet include the principal and interest liability of provident funds and pensions of all employees employed under APSEB (till 1999) and interest repayment of vidyut bonds that APGENCO raised.