PSPCL forms committee to discuss power purchase pacts

Aman Sood

Tribune News Service

Patiala, June 19

Days after The Tribune highlighted how consumers in ‘power-surplus’ Punjab are paying approximately Rs 1.05 per unit extra due to the faulty power purchase agreements (PPAs) signed by the previous state government, the Punjab State Power Corporation Limited (PSPCL) has formed a three-member committee. The committee, comprising director, generation, chief engineer (PP&R) and president of the PSEB Engineers’ Association, has been set up for improving the “working of the PSPCL”.

In a letter on June 15, the PSPCL top brass apprised the PSEB Engineers’ Association that its letter mentioning two points had been considered and a committee had been formed. “The three-member committee should submit its report within a month,” reads the letter. “Till 2020, the PSPCL has surrendered unutilised power worth more than Rs 4,000 crore. The per-unit cost from the IPPs has been increasing. Moreover, the IPPs have been finding loopholes and indulging in litigation. The overall impact of such a litigation will be around Rs 20,000 crore over the next remaining 20 years of the agreements,” reads the first point raised by the PSEBA, under consideration of the committee.

The other point raised by it, to be taken up by the three-member committee, is to make Pachawara coal mines fully operational, which can help save money. “If the captive coal mine is made fully operational, the PSPCL will save crores of rupees,” it had suggested in its letter in April.

Under the agreements, fixed charges are to be paid to these three plants even if the state does not require power. In its opinion to the government, the Punjab Advocate General office has already opined that there was deviation from bidding guidelines, adding that the very quantum of power required to be procured by the then state government was unnecessarily increased by the state.

The last Congress government in Punjab (2002-07) had decided to have two private sector thermal plants with a capacity of 1,000 MW each. However, after the change of the government, the proposed capacity was enhanced based on peak demand. “The PSPCL has already paid about Rs 5,500 crore as fixed charges till date for surrendered power. Had this not been paid, the present power rates could have been cheaper by over Rs 1.20 per unit given the cess and taxes on power,” said PSPCL sources. “There is a pressing need to review these IPPs to have an efficient strategy to bring down the cost to make it realistic in the current scenario. Paying fixed charges for three years will be a better option than bleeding the state for 20 years,” say PSEBA officials.

However, officials responsible for arranging power said: “To meet the peak power demand, which is well in excess of 13,000 MW during the paddy season, the PSPCL cannot meet its peak demand without IPPs’ generation. Thus, if the PPAs are to be scrapped or reviewed, the new committee must ensure an alternative power availability mechanism during these peak months,” they said.