Honeymoon's over, now fights erupt in Andhra Pradesh, Telangana

HYDERABAD: Andhra Pradesh is preparing to take steps that could reduce the amount of electricity that Telangana will receive, raising the prospect that the recently-separated states will descend into a rancorous fight over sharing of resources.

On Tuesday, the Andhra government directed its electricity generation utility APGenco to scrap power purchase pacts with distribution companies, two of which are in Telangana, sending a message that it inclined to rework the agreements on terms more suitable to itself.

Andhra’s move comes a week after Telangana decided to put on hold the release of water to the Krishna delta region. Andhra Pradesh and Telangana were created as separate states on June 2.

Andhra owns over 60 per cent of the combined state's power generation assets of 16,465 megawatt. The reorganisation law stipulates division of power plants between the successor states based on their geographical location.

However, Telangana secured 54 per cent of power allocation based on a consumption track record formula through a contentious government order in April, two months after parliament passed the state reorganisation act.

The decision to renegotiate power purchase pacts for 4,698.6 megawatt of capacity has been taken because Andhra will not be able to attract large industrial projects if it does not have adequate electricity, a minister said on condition of anonymity.

The move also comes close on the heels of protests opposing the consumption-based formula for power allocation through a government order.

The protesters have argued that residual Andhra has received a raw deal to support industrial projects and high density of agricultural pump sets in Telangana.

However, Andhra's move is being seen by some Telangana lawmakers as retaliation for the decision to stall the release of water to the lower riparian state. On Wednesday, Telangana chief minister K Chandrasekhar Rao directed officials to address power problems for industry.

"The move by the Andhra will result in Telangana ending up with an immediate power deficit of nearly 600 MW," said Telangana minister T Harish Rao. Pointing to the power consumption needs of Andhra lawmakers in Hyderabad, which remains a common capital for 10 years, Rao appealed to the neighbouring state to review its "unilateral decision".

An official at the Andhra Pradesh Electricity Regulatory Commission told ET that while the reorganisation law stipulates the continuation of power purchase agreements, what was not noticed was that these pacts had expired in 2002 itself.

K Nageswar, a member of the legislative council, blamed what he called the "lopsided approach" of the UPA government for the disputes.