Kerala Electricity Regulatory Commission refuses nod to long-term power purchase
THIRUVANANTHPAURAM: KSEB Limited’s long-term power purchase plans have been dealt a severe blow with the State Electricity Regulatory Commission refusing to approve the purchase of 565 MW, or 65 percent of the 865 MW the public utility had contracted from private producers for the next 25 years. The ERC has approved the purchase of only 300 MW; 200 MW from Jindal Power Limited at Rs 3.6 a unit, and 100 MW from Bharat Aluminium Company at Rs 4.29 per unit. Two major objections have been raised. One, high power purchase cost. Two, deviated from central guidelines.
The ERC had in 2014 stipulated that the average cost of short term or day-ahead power purchase should not be over Rs 5 per unit. “The said rate cannot be misinterpreted as a benchmark or ceiling for long term power purchase and as a blanket approval for the purchase of power at any rate below Rs 5 per unit,” the ERC order said. The limit was fixed on the basis of demand and supply constraints that prevailed in the country three years before. Things have changed for the better now.
The country’s generation has now outstripped demand capacity; if the generation capacity is 3 lakh MW the peak demand is only about 1.5 lakh MW. The rate of solar power too has come down below Rs 4.50 a unit. Deviations from central guidelines, too, were pointed out. For instance, KSEBL had awarded contract to Jhabua Power for Rs 4.15 per unit while there was a lower bid of Rs 3.60 per unit. The basic pursuit of a bidding process is to “discover the lowest bid”. If at all the bid cannot be granted to the lowest bidding trader, the Central guidelines say that fresh bids have to be called. KSEBL had violated this provision.
Both under- and over-biding were also pointed out by the ERC as distortions. While Bid-1 intended 450 MW, it ended up contracting only 315 MW. As for Bid 2, the target was 400 MW but the power eventually contracted was 550 MW. “KSEBL has purchased more quantity of power than the tendered quantity in Bid-2 stating the reason that it could not get the full tendered quantity in Bid-1. Such purchase of more than the tendered quantity is not in accordance with the general principles of tender process,” the ERC said in its order.
