Even as the state government has allowed the Kerala State Electricity Board (KSEB) to buy power from Reliances' BSES power plant in Kochi for two more years, KSEB unions have pointed out that the agreement is a loss-making proposition for the KSEB. The unions have also demanded a detailed investigation into the "deal". The decision, which forces the KSEB to buy power at Rs 8 per unit from BSES, comes at a time when the former had already inked agreements to purchase power from the energy exchanges at Rs 5 per unit. The decision to extend the power purchase agreement will financially cripple the KSEB, according to the unions.
They point out that the original agreement with BSES was signed 15 years ago when the state was in the midst of an acute power crisis. Though the 165-MW plant has an annual generation capacity of 1,100 million units (MU), the KSEB has purchased only 408 crore units till 2015. The agreement with BSES had expired in October 2015. Till then, the KSEB had paid BSES Rs 1,688 crore as fixed deposit alone, they said. "As the total cost of establishing the plant was just Rs 620 crore, BSES has got thrice that amount from KSEB already," . According to him, once the agreement expired, the KSEB had actually shed its liability of paying a huge amount as fixed deposit to BSES. As per the fresh tariff proposal submitted by BSES, the annual fixed cost for the first and second tariff periods will be Rs 43.06 crore and Rs 44.77 crore respectively, he said.
"Over the 15 years, the KSEB has remitted a total Rs 7,042 crore to BSES as power purchase cost and fuel costs. If you were to compare the power bought and the money remitted, each unit from BSES costs Rs 17,". Initially, the Kerala State Electricity Regulatory Commission had declined to clear a KSEB proposal to renew the agreement with BSES. The company later submitted fresh tariff proposals, following which the government waved the proposal through via government order dated February 24, 2016.