On June 10, the Punjab State Electricity Board Engineers Association (PSEBEA) held a meeting with the PSPCL management and emphasised the need for cancellation of PPAs with the three private power producers. (HT FILE PHOTO)
On June 10, the Punjab State Electricity Board Engineers Association (PSEBEA) held a meeting with the PSPCL management and emphasised the need for cancellation of PPAs with the three private power producers. (HT FILE PHOTO)

Power engineers join chorus against PPAs, PSPCL seeks detailed plan of action

The state’s power utility, PSPCL, is bearing the burden of fixed charges payable to the IPPs, even without using the power generated. Ultimately, this amount is recovered from consumers through hike in tariff
PUBLISHED ON JUN 16, 2021 09:47 PM IST

Patiala Engineers dealing with power sector across the state have joined the chorus against Power Purchase Agreements (PPAs) that the state government had signed with Independent Power Producers (IPPs). The state’s politicians, including some rebels within the ruling Congress, have sought the scrapping of the PPAs

The state’s power utility, Punjab State Power Corporation Limited (PSPCL), is bearing the burden of fixed charges payable to the IPPs, even without using the power generated. Ultimately, this amount is recovered from consumers through hike in tariff.

On June 10, the Punjab State Electricity Board Engineers Association (PSEBEA) held a meeting with the PSPCL management and emphasised the need for cancellation of PPAs with the three private power producers. Three directors from the PSPCL, RP Pandov; Jatinder Goel and Gopal Sharma, attended the meeting with PSEBEA president Jasvir Singh Dhiman and seven of his office-bearers.

According to the minutes of the meeting released on June 15, the management has asked the association to submit a detailed proposal for revision of the PPAs with at least one private power plant. The PSPCL management also assured that it will look into the matter.

In its recent letter to the Punjab government, however, the PSPCL has said that the termination of PPAs would lead to severe power crisis in the state. The utility also claimed that it would not be able to meet the peak demand of 13,000 MW during the paddy season.

In 2006, Punjab decided to have two private sector thermal plants of 1,000 MW capacity each, with coal allocation from the Pachhwara coal mine in Jharkhand. After a change of regime in 2007, the proposed capacity was enhanced, based on peak demand and round the clock supply to farmers.

This ignored Central Electricity Authority (CEA) guidelines that state that the installed capacity has to be based on average predicted demand (base-load). The result has been high fixed cost. An average consumer in the state has, thus, been burdened with an expense of at least 1,000 per year. This has also meant that the PSPCL has been paying 1,500 crore a year starting 2019-2020 towards fixed cost against surrendered power.

The PPAs also stipulate that the PSPCL has to pay fixed charges for three years (around 10,000 crore or 275 crore per month), if it terminates the contract.

“The peak power demand of 13,000 MW during paddy season is only for a month. This cannot be an excuse for not cancelling or renegotiating these contracts to PSPCL’s advantage,” said an engineer, not wanting to be named. He added that after the peak season, power demand reduces to a 6,000 MW.

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