Thiruvananthapuram: The Kerala State Electricity Board has incurred an additional liability of Rs 3 crore per day, owing to the cancellation of the long-term Power Purchase Agreements (PPA) by the Kerala State Electricity Regulatory Commission.
With the commission’s order for cancellation of the long-term deals with private manufacturers in the sector, the electricity which used to be bought at Rs 4.26 per unit per day, will have to be bought at Rs 6.5 to Rs 8 per unit now, at least, for a short term.
Moreover, because of the arbitrary cancellation of the contract, the Kerala State Electricity Board has to give compensation too to the companies. This burden would naturally trickle down to the power consumers.
The PPAs with Jhabua Power Limited, Jindal Power Limited, and Jindal Thermal Power Limited have been cancelled by the Commission.
UDF-era deals
For the past seven years, Kerala had been buying 465 megawatts (MW) of power from the three companies through a long-term deal at the rate of Rs 4.26 per unit. The contract for 25 years was entered into by the previous United Democratic Front State Government.
Last month, the Regulatory Commission had cancelled these contracts pointing out that there are technical problems in the agreements.
Power availability too hit
The KSEB had sought the Commission’s permission for load shedding as there was a sudden dip in power availability. Then, the Commission permitted the KSEB to buy power from the same companies for 75 more days, on a short-term basis. However, as the long-term contract has been cancelled and the deal is only for a short period, the companies have informed the board that they will not sell power for the old price.
Following this, the KSEB is forced to buy power by paying a higher price. It buys 10 million units of power at this rate. This leads to an additional liability of Rs 225 crore for 75 days. Meanwhile, the private companies stand to gain crores of rupees.
