Thiruvananthapuram: Kerala government has informed the regulatory commission that if the long term electricity contracts remain cancelled, then KSEB will have to pay a compensation of Rs 500 crores to the private electricity companies. On top of this, the electricity board will be forced to clear the pending dues of up to Rs 270 crores in short notice. The situation will be a major blow to the electricity board which is already reeling under losses. 

It should be noted that the regulatory commission had decided to scrap four 25-year-long contracts citing procedural irregularities KSEB used to avail electricity for cheap price via these contracts. The state government has now submitted a letter to the regulatory commission requesting to reinstate the cancelled contracts by considering the welfare of the people in the state. The Additional Chief Secretary of the Energy Department has also informed the commission that if the contracts are not revoked, then power regulations shall be imposed in the state. The government has interfered in the issue by making use of a special provision in the electricity act.

KSEB submitted a petition for reinstating the contracts yesterday. The commission will look into the matter in detail before taking a final decision. Feedbacks will be collected from the consumers as well. The commission will issue its verdict in December. If the contracts remain cancelled, then the state will face acute power shortage in summer.