Discoms: Call for review of power deals

Discoms paying high to private plants.

Hyderabad: The changed power scenario in the country is putting pressure on state governments to review the existing power purchase agreements with independent power projects that have turned out to be a financial burden on Discoms. The All India Power Engineers Federation has started applying pressure on state governments, beginning with Punjab.

AP finance minister Yanamala Ramakrishnudu said that existing PPAs should be reviewed in the interest of Discoms as well as the public. Reforms in the power sector have led to a drastic decline in the cost of power. It has also made ample power available to consumers. But due to old PPAs, Discoms are paying more to private power plants and facing losses. Under the old policy, any private power plant is allowed to do third party sale and all power projects must sell only to Transco. Due to shortage of power and funds scarcity to construct power plants in the public sector, the government enco-uraged the private sector to set up power plants.

State governments have signed PPAs with private power plants for a period of 20 to 25 years. Most clauses in the PPAs are in favour of private power plants instead of the consumers or Discoms. A majority of the state governments are purchasing power at more than Rs 5 per unit from private power projects. If the state government does not need power it still has to pay fixed charges to the private power plants.

Reforms in the power sector have ensured that power is available between Rs 3 and Rs 4 per unit and even at lesser rates. But Discoms end up paying more to private power plants. For example, the cost of solar energy in 2012 per unit was Rs 17.01 but now the it has come down to below Rs 3 per unit. But Discoms are paying '17.01 per unit as per the PPAs.

Due to this, the All India Power Engineers Federation is asking state governments to review the PPAs. The Gujarat power purchase policy lays out several safeguards regar-ding right of refusal and allowing power utilities to surrender unwanted power without paying for capacity charges. But a majority of the states signed PPAs allowing purchase of 100 per cent power generated by private power plants or paying fixed charges for power available but not required by state governments. All India Power Engineers Federation spokesperson Vinod Gupta said long term-power purchase agreements, which are burdening Discoms financially, must be reviewed.

( Source : Deccan Chronicle. )
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