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Home KSEB KSERC pulls plug on KSEB power purchase pact

KSERC pulls plug on KSEB power purchase pact

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KSERCDealing a heavy blow to the Kerala State Electricity Board (KSEB), the State Electricity Regulatory Commission has declined to clear the greater part of an ambitious power purchase deal entered into by the KSEB with suppliers outside the state for tying up 865 megawatts (MW) for 25 years.

The commission has frowned upon purchase agreements worth 565 MW inked under the Design, Build, Finance, Own and Operate (DBFOO) scheme. In an order dated August 30, it cleared the purchase of 300 MW only, setting the ground for a fresh round of battle between the two entities. According to the commission headed by T M Manoharan, in striking the deals, the KSEB has 'deviated' from Government of India norms and Tariff Regulations, 2014, issued by the commission. The commission has only approved the purchase of 200 MW from Jindal Power Ltd at '3.60 per unit and another 100 MW from Bharat Aluminium Company Ltd, at '4.29 per unit.

Five other deals totalling 565 MW will be cleared only after KSEB gets approval '' from the Government of India for the deviations from the guidelines and on getting the views from Government of Kerala,'' the commission said in an order dated August 30. These agreements involve 115 MW from Jhabua Power Ltd, Gurgaon; 100 MW each from Jindal India Thermal Power Ltd, Jhabua Power Ltd and East Coast Energy Pvt Ltd and 150 MW from Jindal Power.

Interestingly, the August 30 order also reveals the rift within the commission on this issue. Setting aside a precedent, only Manoharan, the commission chairman, has signed the order. It states that the two commission members, Vikraman Nair and S Venugopal, have 'refrained' from signing it as they were directors of the KSEB when the deals were struck. The order also goes on to say that Venugopal has stated that ''his views on certain points mentioned in the order are different.''

During the UDF Government's tenure, the KSEB had decided to go in for 25-year deals with power suppliers outside the state to overcome the twin handicaps of soaring demand and stagnant internal power generation. Long-term deals have other uses; they get priority on the inter-state transmission lines compared to short-term purchases or medium-term open access. They also tie up a new power plant outside the state for exclusive use for the duration of its life.

The state government had cleared the purchase for 865 MW in December 2014, and the KSEB submitted its plea to the commission for adoption of tariff. Two bids were called - one on March 5, 2014, for a total 450 MW and the second on April 25, 2014, for 400 MW. However, the commission says there were anomalies in the execution of the agreements. Power supply under the first bid should commence by December this year, and the second, October 2017.

Source- Indian Express


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