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Home / Cities / Covid-19: PSPCL not to buy power till restrictions stay in place

Covid-19: PSPCL not to buy power till restrictions stay in place

Invokes Force Majeure clause in PPA contracts; move to save it ₹20 crore a day

cities Updated: Mar 31, 2020 00:19 IST

Citing restrictions in place due to Covid-19, the Punjab State power Corporation Limited (PSPCL) has invoked the Force Majeure clause in Power Purchase Agreements (PPAs) with private thermal plants and will not purchase power till constraints remain in place.

With this, the PSPCL will save ₹20 crore a day, which it is paying to producers as fixed cost for surrendering power, for which it has made purchase commitments. PSPCL suffered a loss of Rs 175 crore during the first week of restrictions, as sales nosedived.

A Force Majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations.

The utility has also slipped into a financial crisis in the wake of restrictions, as it is finding it difficult to collect bills raised on consumers amid the lockdown. It is cash-strapped also because it is yet to get full subsidy from the state government for free power to the farming sector.

“Due to the imposition of covid-19 lockdown, circumstances are beyond PSPCL control, and thus the situation qualifies as Force Majeure under the PPA in as much as it prevents the performance of obligations on the part of the procurer, including the PSPCL, of scheduling the power from your generating station,” reads the notice served to power producers. This has been served to L&T Rajpura, Talwandi Sabo Power Plant, GVK Goindwal, all other independent power producers, and even factories, which have co-generation capacity.

The notice adds, “In the above circumstances of sudden reduction in demand load in Punjab, presently, you are hereby intimated that the PSPCL has been forced to stop scheduling of power (power purchase)…as the situation eases out, the PSPCL may again start buying power as per requirement of power load in the state.”

The state’s three private power plants at Rajpura, Talwandi Sabo and Goindwal have a combined capacity of 3,920 MW. PSPCL’s own plants at Lehra Mohabbat and Rupnagar are also not operational.

These days, power is being supplied to consumers in the state from the Bhakra power project run by the Bhakra Beas Management Board and from the central pool.

PSPCL chief managing director Baldev Singh Sran said, “The notices are in the interests of power consumers of Punjab. The situation is beyond the PSPCL’s control due to the curfew and restrictions and thus we have invoked the Force Majeure clause, which is there only for such situations. PSPCL is trying to cut its losses, as ultimately these do pass on to consumers.”

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