CAG findings: ‘Haryana cited non-availability from Adani to buy costly power from private producers’

Published on Mar 30, 2022 12:52 AM IST

Assuming we did not go for the purchase of this power, we would have to purchase from the power exchange at much higher rates; people got an assured supply because of these contracts, says PK Das, ACS, power

A single-day shortage of coal at plants was taken as basis for entering into the PPA of three years’ duration, the auditors said in a report. (HT File)
A single-day shortage of coal at plants was taken as basis for entering into the PPA of three years’ duration, the auditors said in a report. (HT File)
By, Chandigarh

The Haryana Power Purchase Centre (HPPC), which buys electricity for the state’s two power distribution companies, justified the procurement of costly thermal power from private generators under a central government scheme by considering acute power shortage due to non-availability from the Adani Power Limited (APL) under litigation power purchase agreements and state-owned plants not running at full capacity due to coal shortage.

Auditors at the comptroller and auditor general (CAG), however, found this justification untenable stating that power generators were legally bound by the terms and conditions of power purchase agreements (PPAs) and issues with the Adani Power were resolved by the time the HPPC gave in principle consent in 2018 to purchase power under the central scheme.

A single-day shortage of coal at plants was taken as basis for entering into the PPA of three years’ duration, the auditors said in a report.

‘Favour extended to private producers’

The CAG said the HPPC thus incurred an extra expenditure of 209 crore in purchasing costly power from private producers and preparing incorrect merit order which put extra burden on consumers.

“The HPPC had extended favour to these private power producers by purchasing their power at 4.90 to 5 per unit against the variable cost of the state’s own generating stations - 3.25 to 3.88 per unit. This burden will increase further till the validity of the PPAs in March 2022 as the agreement can only be terminated upon defaults defined in the agreement which does not include error of assessment by HPPC,” the audit said.

‘No revision in tariff thus no burden on consumer’

Additional chief secretary (ACS), power PK Das, however, said there are two options before them if the state faces shortage of power. “Either buy power or put in place power regulatory measures. The people of the state did not face a crisis because of this power. Mind you this is an essential sector,” the ACS said, responding to the audit findings.

Das said assuming they did not go for the purchase of this power, then they would have to purchase from the power exchange at much higher rates. “We got an assured supply of electricity because of these contracts. This was done three years ago. We have not revised the power tariff. So, there is no burden on the consumer,” the ACS said.

The central government, in 2017, had launched a pilot scheme for procurement of 2,500MW power from coal-based private power stations to help power distribution companies meet power deficits and replace costly generation with cheaper and reliable power.

The HPPC started procuring power under this scheme from April 2019 after entering into agreement with the Power Trading Corporation (PTC), which in turn, entered into agreement with power producers for procurement of 400MW power at the rate of 4.24 per unit discovered through bidding process.

After considering transmission charges, losses beyond point of grid and trading margin of PTC, the effective tariff worked out to be 4.90 to 5 per unit.

The auditors said the HPPC had in March 2018 assessed Haryana as a power surplus state during 2017-18 to 2020-21 with marginal deficit during 2021-23. “However, for procurement of this power, the HPPC in its October 2018 petition before the state regulator indicated yearly deficit of 563MW to 2,351MW during 2018-19 to 2023-24 by excluding power availability from already tied up sources of APL and the Coastal Gujarat Power Limited (CGPL).

‘Uninterrupted supply to consumers in an awkward situation’

The HPPC, in its reply, said the purpose of the pilot scheme to meet the power deficit was successfully achieved and uninterrupted supply to the consumers of the state has been ensured in an awkward situation where generators like Adani and CGPL breached the sacrosanct PPAs.

The state’s generating plants could not run to their full capacity due to non-materialisation of coal supply and exorbitant rates of spot purchases in the exchange.

“Interruption of power by Adani was not merely an apprehension but it has a history of stopping the power on one pretext or the other. Both CGPL and Adani were seeking revision in tariff by way of amendment in PPA. In case of non-revision of PPA, both the generators, time and again, had given warnings for stoppage of supply of power and the issues with APL and CGPL were not resolved by the time HPPC gave in principle consent to buy power under the scheme,” was the HPPC’s reply.

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Wednesday, November 30, 2022
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