Cancellation of KSEB’s power purchase contracts may lead to load shedding

SN Jayaprakash

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Thiruvananthapuram: Concerns over load shedding in Kerala escalate as the state's electricity regulatory commission cancelled agreements between the Kerala State Electricity Board (KSEB) and three private companies, citing rule violations.

KSEB has received legal advice to approach the appellate tribunal against the cancellation of contracts. The board will seek the state government’s approval for implementing load shedding if an unfavourable verdict comes out. It has been estimated that the repealing of contracts will result in the shortage of 1 crore units of electricity daily.

In order to avoid the load shedding, the government will have to allow the board to purchase power at the earlier rate until new contracts at cheaper rates come into force. The electricity cost ranges between Rs 7 and 8 for a unit in the power exchange on account of the summer season. The regulatory commission has revoked the contracts under which the board procured power for Rs 3.60 to Rs 4.30 per unit.

The director board will decide whether to move forward with an appeal against the commission’s order. It also requires the permission of the state government for further action. In view of the disagreements with regard to the contract, the regulatory commission has permitted the KSEB to incur a maximum of Rs 4 from the consumers, though the electricity costs up to Rs 4.29 as per the contracts. Meanwhile, Jindal Power Corporation Limited has informed the board that the company will stop supplying power on May 23. Jindal supplies 250 megawatt power to the board. As per the decision of the regulatory commission, Jhabua Power Corporation will also stop dispensing 215 megawatt of power, which it currently distributes to the board.

Though the government has mulled to enter into new power purchase agreements, the electricity is not presently available at the expected lower price. Rs 9.26 per unit had been fixed when the board recently decided to purchase 6 lakh units of electricity till May 31 due to the extreme shortage of power in the summer season. When the Power Finance Corporation invited tenders for 4500 megawatt of electricity, it could only obtain 1170 megawatt at a cost ranging from Rs 4.49 to Rs 5.41.

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