Thiruvananthapuram: The controversy over the reinstatement of the low-priced long-term electricity contracts seems to have worsened further. Chief Secretary Dr V Venu, who has studied the issue, has handed over the file concerned to electricity minister K Krishnankutty, which comprises his recommendations to solve the issue.

It should be noted that CM Pinarayi Vijayan had criticised the Regulatory Commission in the legislative assembly, for cancelling the previous contracts. He accused the commission of acting against the interests of the state. Such instances are a rarity in the history of the state. In the context of the criticisms raised by the Kerala CM and recommendations submitted by the chief secretary, the regulatory commission published a note detailing the circumstances that forced them to cancel the particular contracts. 

While initiating the procedures for cancelling the contracts, a major private company in the country approached the electricity board, offering electricity at a low cost. However, KSEB was of the opinion that electricity purchases can be made only via competitive tenders. The electricity department is also apparently disinterested in reinstating the previous contracts.      

The contracts through which 465 megawatts of electricity were purchased for a maximum of Rs 4.25/unit, for the last eight years, were cancelled by the regulatory commission citing problems in the tender procedures. This forced the KSEB to purchase electricity for higher rates. The shortage of rain in the state resulted in scanty electricity production as well. At present, the state electricity board is incurring losses amounting to crores every single day. While tenders were called in for the five-year mid-term contracts, the price for a single unit of electricity was fixed at Rs 6.88/per unit.

It is under these circumstances that the chief secretary was appointed by the state government to study the possibilities of reinstating the previous contracts. Dr V Venu submitted his recommendations after holding discussions with the superintendents of the finance, and energy departments, he also talked with Rajan N. Khobragade, the chairman of the KSEB. It is known that the chief secretary has recommended reinstating the contracts, in the best interests of the consumers. There is no proof affirming profits for KSEB in case of cancelling the contracts. In contrast to this, KSEB and the electricity consumers in the state are actually facing the brunt of the hasty and short-sighted decision taken by the electricity commission, says the report.

Dr V Venu has recommended reinstating the contracts under section 108 of the electricity rules. Through this provision of the law, the state government is entitled to give advice to the regulatory commission in the best interests of the public. Following this, the commission can make decisions according to the recommendations made by the government. However, owing to the current friction between the regulatory commission and the government, it needs to be seen whether the former will be ready to oblige to the recommendations made by the state government. Meanwhile, KSEB is also accused of laxity in approaching the Supreme Court seeking the continuation of the pre-existing contracts.    

 KSEB Vs Regulatory Commission 

Amidst this, the officials of the regulatory commission have heavily criticised the KSEB. According to the commission, the contracts were cancelled for failing to adhere to the guidelines of the central government. As per the rules, the KSEB is supposed to receive approval from the union and the state government for even the minute changes clauses before approaching the regulatory commission. However, the KSEB in this case, has not been able to do this so far.

As per the commission, the current crisis has nothing to do with the cancellation of contracts. Due to the scarcity of rain, water which could have produced almost 200 crore units of electricity is absent now. The electricity consumption has shot by almost 15 percent owing to the dry climate. The situation isn’t any different in other states. In its note, the commission also pointed out that surplus electricity was purchased for higher prices from the power exchange for evening purposes, even during seasons with abundant rainfall.