Faulty power pacts cost consumers Rs 1/unit extra in Punjab

Fixed charge burden Rs 1,500 cr Power consumers are paying approximately Rs 1.05 per unit extra due to the faulty power purchase agreements (PPAs) signed by the state in the name of making Punjab a “power-surplus state”. This is over and above the separate taxes and cess paid by consumers on power consumed. The Punjab State Power Corporation Limited (PSPCL) has been paying fixed costs to independent power producers (IPPs) despite its failure to draw optimum electricity from them. Till date, it has paid roughly over Rs 5,500 crore in the past over six years as per PPAs with the IPPs.


“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. Starting from the year 2013-14, the PSPCL is now paying Rs 1,500 crore per annum towards fixed cost against the surrendered power. “Punjab sees peak power demand of over 10,000 MW during the paddy season only, but the IPPs are paid almost the whole year despite surrendering power,” say power experts.

“If the Rs 1,500 crore fixed charges are not paid, then the tariff can be reduced by about 22 paise per unit for all categories of consumers and till date roughly over Rs 1.05 per unit tariff could have been reduced,” said All India Power Engineers Federation VK Gupta. “Many states have signed PPAs, but are using power only during the peak time. They have no clause to pay for the surrendered power,” he said.

The state has three private thermal plants — Talwandi Sabo Power Plant, Nabha Power Plant and GVK Talwandi Sabo. The PSPCL has been keeping its own thermal plants shut to draw more power from the IPPs, but while doing this, the PSPCL has to pay salaries to its staff without using their services optimally.

“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 litigation will be around Rs 20,000 crore over the next remaining 20 years of the agreements,” reads a PSEB Engineers’ Association’s letter sent to the PSPCL management in April.

Petition filed with regulator: PSPCL

PSPCL CMD A Venu Prasad said they had already filed a petition with the power regulator to “terminate some of the old” PPAs with National Thermal Power Corporation Limited

However, he did not comment if the government was considering reviewing the power purchase agreements with Punjab-based independent power producers too


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