Thiruvananthapuram: A dispute has emerged within the government over its decision to procure electricity from private firm GNA Energy Private Limited, with documents revealing differences in the assessments made by Chief Minister VD Satheesan, Electricity Minister Sunny Joseph and the Kerala State Electricity Board (KSEB). The disagreement centres on competing cost calculations, with KSEB arguing that Himachal power would be cheaper when additional peak-hour purchases are included, while the Chief Minister's office maintains that GNA offers electricity at a lower cost per usable unit.

Documents show that both Sunny Joseph and former Electricity Secretary and KSEB CMD MG Rajamanickam had favoured procuring power from Himachal Pradesh over entering into a contract with GNA Energy. However, the government decided to proceed with the GNA deal, citing its comparatively lower cost.

The differences have also raised questions over the financial implications of the proposed procurement and whether the State Electricity Regulatory Commission will grant approval for the contract.

In a file note dated October 19, Sunny Joseph stated that procuring electricity from Himachal Pradesh would be in the state's best interest. His position was based on the assessment submitted by the KSEB CMD.

The Electricity Department had earlier recorded, in a note dated September 29, that procuring power from Himachal Pradesh between October and May would cost an estimated ₹2,232 crore. This was the figure cited by the CM at a press conference while explaining why the government could not proceed with the Himachal option.

However, a comparative report submitted by KSEB in the last week of October presented a different picture. According to the report, procuring electricity from Himachal Pradesh between November 2026 and March 2027 would cost ₹1,281.95 crore, significantly lower than the expenditure involved in the GNA proposal.

The report estimated that procuring 24-hour power from GNA would cost ₹1,566 crore. An additional ₹442.21 crore would have to be spent on purchasing electricity during peak hours, taking the total expenditure to ₹2,008.69 crore. This would mean an additional liability of ₹726.74 crore compared with the Himachal option.

Under the proposed arrangements, KSEB would procure 181.2 crore units from GNA and 88.41 crore units from Himachal Pradesh. While GNA would supply 500 MW continuously, the Himachal arrangement would provide up to 900 MW during peak hours, with lower quantities at other times. KSEB maintained that the Himachal option would better address peak-hour demand.

Why the Minister and KSEB favoured Himachal
Availability: Electricity from Himachal Pradesh would be available during April and May 2027, when Kerala is expected to face a severe power shortage. GNA, however, has offered supply only from November 2026 to March 2027.

Daytime power: Although GNA has offered 500 MW round the clock at ₹8.48 per unit, a substantial portion of the supply would be solar power available during daytime, when demand is relatively low. KSEB argued that procuring such power could become a financial liability and would not adequately meet peak-hour requirements.

Reliability: KSEB also raised concerns over GNA's OTC platform, stating that it was not authorised. It maintained that the Himachal arrangement would be a safer option, even though the quoted rate was ₹14.50 per unit. This rate could potentially be brought down to ₹12.50 through negotiations between governments.

How the Chief Minister's office justifies the GNA deal
The Chief Minister's office, however, maintains that the government opted for the more economical proposal based on calculations in the note submitted by the KSEB CMD.

According to its assessment, procuring 181.2 crore units from GNA over five months would cost ₹1,566 crore. Even if the daytime electricity is treated as unusable, the average cost of the remaining usable power would work out to ₹13.83 per unit.

In comparison, procuring 88.41 crore units from Himachal Pradesh would cost ₹1,281.95 crore. Excluding the electricity available during daytime, the average cost would rise to ₹16.91 per unit. The Chief Minister's office argues that this makes GNA the more economical option.

It has also pointed out that around 1,000 MW of electricity would be available at lower rates from the Sinar project and NTPC during April and May, eliminating the need for expensive power from Himachal during those months.

What the Chief Minister said
Satheesan maintained that procuring electricity from Himachal Pradesh at ₹14.50 per unit would result in an additional liability of ₹2,232 crore, amounting to an excess cost of ₹8.50 per unit. In comparison, the additional liability from GNA would be only ₹2.60 per unit, he said.

The Chief Minister also said the decision to procure electricity at the lowest possible rate was taken after discussions with the Electricity Minister. He rejected the suggestion that either the Minister or KSEB had warned that a contract with GNA would result in losses.

Satheesan further pointed out that the previous government had also procured electricity from the same private company. Power from Himachal Pradesh at ₹14.50 per unit had been purchased only once, during an emergency, he said.

He added that NTPC had offered 1,000 MW at ₹5.18 per unit after March, making high-cost electricity from Himachal unnecessary during the summer.

The Chief Minister also cited the revival of a power generator that KSEB had planned to keep shut down for maintenance for several months. Following his intervention, the generator began producing 150 MW of electricity within four days, he said.

Regulatory approval remains uncertain
The government's decision to proceed with the GNA contract has also brought the regulatory approval process into focus. Under the rules, prior approval of the State Electricity Regulatory Commission is required for such procurement, except in emergency situations.

It remains to be seen whether the commission will approve the agreement.

Asked about the apparent difference of opinion between the Chief Minister and the Electricity Department, Sunny Joseph said the Chief Minister had already explained the government's decision and that he had nothing further to add.