PPAs unlikely to be scrapped as dependency on private plants high in Punjab

Ruchika M Khanna

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Tribune News Service

Chandigarh, September 1

When Chief Minister Capt Amarinder Singh said all power purchase agreements (PPAs) made with independent power producers (IPPs) and other power generating companies cannot be scrapped, he was not off the mark. After all, no government can afford to jeopardise the energy security of the state it governs.

Together, the three IPPs, caught in the midst of a political storm over the alleged lopsided PPAs signed with the previous Akali-BJP government, are supplying 2,948 MW of power to Punjab in this time of “high power demand” during the paddy cultivation season. As of today, the state is buying another 2,248 MW on the power exchange, at a high cost of Rs 5.08 paisa per unit. In comparison, the state’s own thermal power generation is just 1,045 MW and its own hydropower generation is 804 MW, besides renewable energy generation of 554 MW.

Agreements lopsided: Engineers’ body

The PSEB Engineers’ Association, however, remains steadfast in its stand that the PPAs are lopsided and should be scrapped

They also maintain that this would not jeopardise the state’s energy security

“If the PPA with the TSPL is scrapped, we can buy 80% of power it generates from the power exchange. Power on the exchange may be expensive now, but coal shortage is a temporary situation, as is the high price of power available on exchange,” says association president JS Dhiman

In clear terms, it means that of the 12,199 MW of power supplied yesterday (and 11,368 MW today), the state’s own generation without the IPPs’ production is just 20 per cent of the total demand-supply at 2,403 MW. With the power demand in the state rising phenomenally and a coal shortage being reported, the rate at which power is available at the exchange has gone up substantially. The state power utility is already finding it difficult to buy power at the exchange. “If the PPAs with the private power plants are scrapped, in situations such as now when coal shortage leads to high power tariff on the exchange, will a cash-strapped state like Punjab be able to buy most of the power it needs?” asked a senior government official.

No wonder the government is now “seeking a legal opinion” on cancellation of three PPAs with GVK for the Goindwal Sahib Plant, with Talwandi Sabo Power Limited (TSPL) for its Mansa plant and with the Damodar Valley Corporation for its plant at Rudrapur in West Bengal. Notice is being sent to the Nabha Power Limited (NPL), asking it to revise and reduce the power tariff rates and ensure it works to its optimum capacity during the peak demand, after all these notices have been legally vetted, a top official in the state government told The Tribune.

Sources said even if the government wanted to scrap these PPAs, these had been framed as per the then policy of the Centre and getting these terminated may not stand either government or legal scrutiny. “While the GVK is already keen on winding up the power plant here, the TSPL may be let off after a fine is imposed on the fixed charges paid to it, as it had failed to operate to its optimum capacity during the peak demand months of June-August,” said the official. Even as the controversy over the PPAs with IPPs continues to rock the Congress boat and the party leadership remains divided over the issue, the state is struggling to stay afloat in the present coal shortage-induced power crisis. None of the thermal plants — both state-owned and private — are maintaining the buffer stock of coal.