Delay Likely in NTPC Ramagundam PPA for 800 MW Telangana Unit

30 Apr 2025 CW Team

The signing of the Power Purchase Agreement (PPA) for the upcoming 800 MW unit of NTPC’s Ramagundam plant is expected to be delayed further, as Telangana’s State Government weighs cost implications. Although PPAs for 1,600 MW (2×800 MW) from the 4,000 MW project—promised under the Andhra Pradesh Reorganisation Act, 2014—have already been signed, the agreement for the third unit is pending. A draft has been submitted to NTPC, but the matter is now under review by the Central Electricity Authority following requests for amendments by central utilities.

The delay stems from concerns raised by Chief Minister A. Revanth Reddy regarding the potential rise in per unit power cost. Currently estimated at Rs 5.3, the price could reportedly surge to over Rs 8 per unit by the time the remaining 2,400 MW (3×800 MW) capacity becomes operational which is expected to take four to five years. Finalising the PPA now would obligate the State to purchase 85 per cent of the power output from the new unit, regardless of future costs.

“Signing the agreement now will make it unavoidable for Telangana to bear additional expenses,” the Chief Minister warned during the recent budget session. He added that the cost per unit would reflect capital costs, coal linkage expenditure, and profit margins—making power from the project more expensive.

The State Government is reportedly considering the possibility of entering into an agreement with NTPC at a later date, based on its evolving power needs.

Supporting the concerns of the State, the Union Ministry of Home Affairs has indicated that Telangana is expected to absorb all the power generated by the NTPC plant. Union Home Secretary Govind Mohan, during a recent review, suggested that the State should take responsibility for the full 1,600 MW output currently generated by the operational units.

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