The Punjab State Power Corporation Limited (PSPCL) has served notice to Larsen and Toubro (L&T)-owned Nabha Power Plant (NPL) for defaulting on the power purchase agreement (PPA) as the company shut operation at its 1,400-MW plant on the pretext of revised pollution norms.
The notice is a first step to cancel the PPA if the company continues to default on power supply to the state for a month. The PSPCL is then empowered to renegotiate the PPA and can even cancel it.
The NPL was built with an investment of Rs 10,000 crore.
This is for the first time that the PSPCL has served such a notice to any of the three private thermal plants in the state.
It had become sore point in politics over the Rs 2,700-crore annual fixed cost even without supply of power. The Congress, in its manifesto, promised to take a relook at PPAs of private plants over fixed cost but failed to do so in three years.
Private plants recently won the case of coal washing charges, costing the PSPCL Rs 500 crore every year, for 21 years. The NPL alone charges Rs 1,300 crore annually as fixed cost charges.
{{/usCountry}}Private plants recently won the case of coal washing charges, costing the PSPCL Rs 500 crore every year, for 21 years. The NPL alone charges Rs 1,300 crore annually as fixed cost charges.
{{/usCountry}}SHUT A DAY TO
THE DEADLINE
The NPL shut its power plant on December 31, 2019, after it failed to adhere to the Centre’s mandatory pollution guidelines on account of the requirement to install flue gas desulphuriser (FGD).
In 2017, the government issued guidelines to install FGD in all power plants within a radius of 300 km by 2019, failing which the company will be fined. On December 30, 2019, NPL wrote to PSPCL that it will be shutting operation from the next day.
With 1,400 MW of power suddenly out of operation, the PSPCL managed the shortfall from its own plants and by buying electricity from outside Punjab.
Installing the FGD can take six months to a year, which means the plant will remain out of operation.
LIABLE FOR ACTION
The PSPCL notice sent on January 4 said, “As per PPA clauses, it’s your responsibility to comply with legal requirements for operating the generating station. You were aware since 2017 of the requirement to install the FGD system, for which construction is yet to commence. You have now proceeded to shut down the generating station for your own default. Apart from causing substantial prejudice to PSPCL and consumers at large, this is default of your obligations under the PPA.” It called upon the NPL to rectify the breach, failing which it would be liable for action.
PSPCL chairman and managing director Baldev Singh Sran said, “We managed the situation by working overtime. I have no other option except to serve the notice in the interest of the state and consumers.”
He said even the PSPCL plants fall under the same criteria, but they didn’t shut operation and so didn’t the private plant at Talwandi Sabo.
A top NPL official, requesting anonymity, confirmed that the operations have been shut due to environment ministry norms. However, he said the NPL will resume operations soon but declined to share details.