PSPCL board halts power deals citing high tariff; technocrats differ

The Board of Directors (BoD) of Punjab State Power Corporation Limited (PSPCL) has deferred power purchase and power sale agreements with two private players. It has also ordered an inquiry into the signing of a power sale agreement (PSA) before approval.

Highly placed sources in the Punjab Government told The Tribune that the decision was taken at a board meeting on Friday. It is learnt that the board has taken cognisance of the “high tariff” at which the power purchase agreements (PPAs) were signed compared to the currently lower solar power tariff.

However, corporation technocrats, who have threatened to launch an agitation against the state government, claim that while the PPA was approved by the board, the PSA with the Solar Energy Corporation of India (SECI) was signed after approval from the chairman-cum-managing director, on the condition that it would be ratified in the next board meeting. “This is a practice to secure power for the state, otherwise other states may sign the agreements. It is routine in power purchase dynamics,” said a senior technocrat, requesting anonymity.

The technocrats also maintain that the approval for buying power, signing the PPA, terms for signing the PSA with the SECI and filing a petition before the Punjab State Electricity Regulatory Commission for final approval of these PPAs were all cleared in the BoD meeting on September 2.

The PSAs and PPAs signed with two solar power producers -- Hexa Climate Solutions and SembCorp Green Initiatives -- were for 150 MW of power over 25 years. The former was to supply 100 MW at Rs 5.13 per unit and the latter 50 MW at Rs 5.14 per unit. However, the state government and now the BoD believe the current solar tariff is between Rs 2.50 and Rs 3 per unit. They have questioned why the PSPCL should commit to a liability of Rs 12,500 crore for 25 years.

The technocrats argue that the power was to be supplied round the clock, meaning the producers would have provided not only solar power but other forms of renewable energy as well, leading to higher rates.

This issue lies at the core of the stand-off between top functionaries of the state power department and the technocrats. The services of one of the directors were recently terminated, while the CMD was transferred out.