Forum wants Punjab Government to buy private thermal plants, experts differ

Tribune News Service

Patiala, September 29

The newly formed Power Sector Reforms Forum has cautioned the state government against cancellation of power purchase agreements saying that such a step might have an adverse effect on consumers.

The forum, comprising retired power engineers of the PSPCL, said the government should instead buy private plants. However, power experts believe that buying the private thermal plants will not solve the issue as the “underutilisation of power is the root cause” of the losses.

Addressing a press conference at the Patiala Media Club the former engineers claimed that electricity tariffs may increase due to higher dependency on procurement of power from Indian Energy Exchange Limited, where the rates are highly volatile and consumers may have to face power cuts next summer.

Bhupinder Singh, convener of the Power Sector Reforms Forum, while quoting data of the Central Electricity Authority said that plant load factor of the three private thermal plants has gone down. Meanwhile, Onkar Singh Bhambra, joint convener, insisted that the only viable solution is that the state should acquire Rajpura and Goindwal Sahib thermal plants, which the respective companies have offered to sell to PSPCL. “The use of cheaper coal from own mine shall reduce the variable cost and resultantly the plant load factor shall improve, making electricity cheaper from these plants. The fixed charges shall also get reduced benefiting consumers”, they said.

The forum leaders also opposed the privatisation of the distribution, proposed in the new electricity act which shall, on one hand, make electricity costlier and also deteriorate the quality of supply to the rural areas.

However, power sector experts said it was surprising that the forum was pleading that there was no issue of over capacity of the IPPs in extra cost of power and the only issue was that these were installed in private sector and the same could be corrected by acquiring these plants. “Surprisingly this is exactly what IPPs want by offering to sell the plants. Till the rate of purchase of these plants is known, how can anyone say that buying it will be viable option?” they questioned.

“If somebody has to quote major reason for high power purchase cost, it is over capacity of these plants and non-utilisation of coal for them from Pachhwara mine in the first instance. Overcapacity has led to underutilisation of these private as well as state thermals, resulting in higher cost of generation from them”, said experts.

Meanwhile, a former chief engineer said that now after having signed PPAs for 25 years at very high rates when they have already recovered major capital cost these IPPs want to exit the PPAS by selling old units at very high costs. “Underutilisation shall remain the crucial point even if these are acquired by the state. The government should not buy these private thermal plants when the state peak load is only for three months. The government cannot use or sell the power produced by these plants for rest of the nine months and thus power cost will rather rise”, he said.