Hyderabad: Telangana's power utilities have incurred staggering losses amounting to over Rs 6,000 crore due to the hasty power purchase agreements (PPAs) entered into by the previous BRS government with the Chhattisgarh government for the supply of 1,000 MW in 2014, official sources said.
A move that was anticipated to be a cost-saving measure has turned out to be a financial nightmare for the state government, they said. The state government has decided to submit the evidence on the Chhattisgarh PPAs to the Justice L Narasimha Reddy judicial commission.
Official sources said that the previous BRS government signed PPAs without inviting tenders, resulting in huge financial loss to the state exchequer. The BRS government had signed an agreement to purchase electricity at Rs 3.90 per unit. However, the actual financial implications have far exceeded actual cost.
Since the commencement of the agreement in late 2017, Telangana has purchased 17,996 million units (MU) of electricity. The financial disbursements towards this purchase have amounted to Rs 7,719 crore, with dues to Chhattisgarh reaching Rs 1,081 crore.
Moreover, additional costs such as transmission line charges of Rs 1,362 crore have pushed the effective per-unit cost up to Rs 5.64, resulting in an unexpected burden of Rs 3,110 crore, which was beyond the initially projected expenses.
Apart from the additional costs incurred, Telangana and Chhattisgarh are locked in a dispute over outstanding payments. While Telangana claims that Rs 1,081 crore is due, Chhattisgarh claims Rs 1,715 crore. The matter was escalated to the Chhattisgarh Electricity Appellate Tribunal for arbitration.
The sources said that Telangana's dependence on Chhattisgarh was compounded by logistical challenges. It never supplied 1,000 MW smoothly from 2017-end, when the agreement commenced.
In view of the lower than contracted supply from Chhattisgarh, Telangana discoms had to buy power in the open market to meet the demand. This resulted in the additional burden of Rs 2,083 crore on the Telangana government between 2017 and 2022. Chhattisgarh stopped power supply in April 2022.
The cost of power from Chhattisgarh further increased because of Telangana discoms contracting a transmission corridor for the supply of 1,000 MW of electricity from the Power Grid Corporation India Ltd (PGCIL).
According to the agreement, discoms have to pay transmission charges to PGCIL regardless of whether the electricity was supplied or not. Due to this, discoms incurred additional charges of Rs 638 crores.
The Telangana government had also incurred an additional loss due to the hasty booking of additional power corridor that can transmit another 1,000 MW of power.
Though Telangana cancelled this booking after realising that there was no possibility of getting additional 1,000 MW from Chattisgarh, PGCIL has issued notices to Telangana discoms to pay Rs 261 crore as compensation for abrupt cancellation of additional corridor.
According to the sources, the Telangana Electricity Regulatory Commission (ERC) has not yet approved these power purchase agreements, raising questions about the legality and financial prudence of the agreement signed by the BRS government.
There are also arguments that thousands of crores of rupees paid to Chhattisgarh without the approval of the ERC should be treated as irregularities and indirect payments.
