Thiruvananthapuram: The state power entity Kerala State Electricity Board (KSEB), would be forced to consider load shedding in Kerala if it doesn't get nod for long-term power deals.
The KSEB is trying to stave off a power crisis after the Kerala State Electricity Regulatory Commission (KSERC) denied final approval for four purchase deals entered into with three power generators to draw 465-megawatt power.
As a last resort, the Kerala State Electricity Board Limited will approach the Appellate Tribunal of the KSERC.
There would be a crisis if the power-generating companies are to withdraw from the deal in the name of the Commission’s order. As the market rate is much higher, the power generators can sell power elsewhere and gain additional profit rather than putting up with the rates desired by the regulator.
The Commission had pointed to the lapses in tender procedures to deny the final approval for the power deals. If the KSEB withdraws from the long-term deals, the power-generating companies would have to be paid about Rs 1,000 crore in compensation. At the same time, Rs 5.5 will have to be paid per unit of power if the KSEB calls for fresh tenders for a long-term power deal. The recent power agreements entered into by others indicate that there would be a loss of about Rs 350 crore at the least.
The long-term contracts of 25 years have only been completed 7 years now. The loss for the next 18 years is estimated at Rs 6,300 crore. Earlier, the Government-appointed panel had found that the four power deals envisaged would entail a loss of Rs 800 crore. After the new Chairman took over, he informed the Government that the calculations had gone wrong.
Meanwhile, if the deals found to have caused a loss of Rs 800 crore are cancelled, the KSEB and the Government have to face a loss of Rs 7,300 crore over the next 18 years.
The KSEB is still buying power as per the current deal at the rate of Rs 4.29 per unit for 350 megawatts and Rs 4.15 for 115 MW.
Even if a fresh tender for a long-term power deal is called for at this point, the KSEB will have to pay an average of Rs 5.50 per unit of power. The market rate for one unit of power in short-term power agreements is Rs 8.5 as of now. To buy power immediately, the rate ranges from Rs 9.5 to Rs 12.
Recently, the KSEB decided to buy 50 MW at the rate of Rs 9.25 to meet the additional demand during summer. Although the KSEB had tried to buy 150 MW more the power generators demanded Rs 12 per unit.
