SGATP achieves major cost reduction, saves Rs 110 cr annually

Time of India

24-05-2025

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Patiala: Shri Guru Amardas Thermal Power Plant (SGATP) in Goindwal Sahib, formerly known as the GVK Thermal Power Plant, has recorded a significant reduction in its power production costs following its acquisition by the Punjab State Power Corporation Limited (PSPCL) in Feb 2024.
The state-run plant has helped the PSPCL save approximately Rs 110 crore annually due to 40-paise per unit drop in the variable cost of power generation.
Prior to the takeover by the govt, the variable cost at the plant was Rs 3.94 per unit (April 2023 to Jan 2024). After PSPCL's acquisition and operational changes, the rate has dropped to Rs 3.54 per unit for the April 2024-March 2025 period. With a scheduled energy output of about 2758 million units, the financial impact of this cost reduction is estimated at Rs 110 crore.
A senior PSPCL official revealed that the fixed cost of the plant was yet to be calculated as the annual revenue retirement (ARR), independently filed by the plant officials due to technical reasons after takeover, was pending before the Punjab State Electricity Regulatory Commission (PSERC) for approval. The reduction in fixed cost of the SGATP is also expected, said the official, adding that for the current financial year (2025-26) and onwards the ARR would be filed by the PSPCL.
The plant's performance has also improved in terms of operational efficiency. The SGATP has recorded a rise in its plant load factor (PLF) — a key measure of actual output — reaching 66.53% in the current FY till March 6, compared to 51.96% in 2023-24 and just 45.27% in 2022-23.
A senior PSPCL official highlighted that the plant's coal supply stability and improved maintenance post-acquisition contributed to this performance.
Earlier, as a private Independent Power Producer (IPP), the plant struggled with just a week's coal stock and higher costs due to loss of coal linkage. Now, with linkage to the Pachwara coal mines, which offer better-quality coal, and consistent coal rake supplies — 485 rakes in 2024-25, including 35 of imported coal — the plant is operating more efficiently.
Commissioned in 2016 with a capacity of 540 MW (2x270 MW), Goindwal Sahib plant had long faced criticism for underperformance.
From 2016 to Nov 2023, it operated at an average PLF of just 34%, despite the plant availability factor (PAF) averaging 61%.
A PSPCL committee in 2021 had even recommended terminating its power purchase agreement due to poor merit order ranking.
The turnaround began after the Bhagwat Mann cabinet approved its purchase on June 10, 2023. The PSPCL acquired the plant for over Rs 1,080 crore via a loan, officially taking control in Feb 2024 and renaming it as SGATP.
In just over a year of govt control, the SGATP generated 2,931.36 MU of electricity, used 1.78 million tonnes of coal, and maintained PLF levels far exceeding its past benchmarks.