Punjab Government to renegotiate pacts on renewable energy

Ruchika M Khanna

Tribune News Service

Chandigarh, July 22

The Punjab Government will be renegotiating the power purchase agreements (PPAs) made with 117 companies generating electricity from renewable energy sources. The state plans to reduce the charges paid to them by Re 1 per unit.

A decision to this effect was taken in a meeting between the Chief Minister’s Office (CMO) and Power Department officials here today. The power officials have been told to convene a meeting with all those producing renewable energy for the state and renegotiate and reduce the charges paid to them, on the same lines as has been done by the Uttar Pradesh Government. The charges paid to private power producers in UP have been reduced by Rs 0.75 per unit.

This decision comes close on the heels of the state filing a petition in the Punjab State Electricity Regulatory Commission for cancelling three PPAs with National Thermal Power Corporation and getting a legal opinion to cancel two other PPAs with Damodar Valley Corporation and GVK. The Chief Minister has been under pressure to cancel the PPAs, majority of these signed during the 10-year tenure of the previous SAD-BJP government, as the state is paying high fixed charges to power producers.

The rate at which the government is buying power from the power producers (through 95 PPAs for solar power) is between Rs 2.67 and Rs 10.62 per unit. Similarly, power being contracted from plants set up in sugar mills and biomass and mini-hydel projects is also at a very high tariff.

Officials point out the setting up of so many renewable energy projects at high tariff (both fixed and variable) led to the state achieving a “power surplus” status. Till the time these projects had not been commissioned and PPAs signed for private power plants at Rajpura, Talwandi Sabo and Goindwal Sahib (2010), the state had surplus of 65 MW only. With the renewable energy generation, the state became surplus by another 1,500 MW.

A perusal of all PPAs of renewable energy reveals that pacts signed with a company setting up two biogas plants of 18 MW each at Faridkot and Ferozepur, have a fixed tariff of Rs 3.28 per unit and a variable tariff of Rs 4.88 per unit, with 5 per cent annual escalation. This company, which has a stake of a sitting MLA from the ruling party, is now giving power at Rs 8.66 per unit. The government will also be negotiating the tariff with this company.

“Since this power is very expensive, we have decided to ask them in no uncertain terms to reduce their tariff by Re 1 per unit,” said a senior CMO official.

Join Whatsapp Channel of The Tribune for latest updates.