Power purchase saps PSPCL of life
Gurpreet Singh Nibber CHANDIGARH:

SINCE 2000 Punjab has splurged R35,916cr on buys; could have financed 7,200 MW of generation instead

Over the past 11 years, the power utility in Punjab has purchased electricity worth Rs 35,916 crore, an amount that would have been sufficient to add a generation capacity of 7,200 MW, and thereby render the state power surplus.

As per current norms, the cost of setting up a thermal power station is Rs 5 crore per MW.

Four years back, the SADBJP alliance on coming to power decided to add 9,900 MW to the state's generation capacity by building six thermal stations.
Had the plan been launched 10 years ago, the new plants would have been running by now, and the state surplus in power supply. That would have also saved part of the expenses on purchasing power.

But such foresight is the stuff of dreams in Punjab. As things stand,the struggle to illuminate the 51 lakh households in the state and
feed another 21 lakh consumers of other categories, including industry and agriculture, requires power purchase nearly equal to the entire annual budget of Punjab State Power Corporation Limited (PSPCL).

This business of purchase has pushed the power utility to the brink of bankruptcy, owing to the heavy loans it has to incur to foot the shopping bill. On a number of occasions, short-term loans too have been taken for the purpose.

“This has pushed us into a vicious cycle that may be hard to break,“ a PSPCL off
19,500 crore yet to be paid back. Of this, Rs 9,000 crore is long-term loans for capital expenditure, and the rest is for day-to-day needs, including power purchase, as per “Estimates of Financial Resources“, an annual document published by PSPCL for internal circulation.

According to PSPCL director, finance, SC Arora, 60% of the purchased power comes from the state's share in the central sector power plants.
Spot purchase of power on sudden demand costs the heaviest. And this happens the most during the peak paddy season. “The four months May onwards see the maximum fluctuation in demand, and are thus the most difficult,“ he said.

Since 2000, the purchase of power, and thereby the expense on that,has been rising steadily.

It was 6,892 million units (MUs) in 2000-01 (at an average cost of 171.32 paise per unit) and 16,310 MUs in 2010-11 (332 paise per unit).
On the other hand, during this period, the state power utility added
only 920 MW of generation capacity in the form of a thermal station at
Lehra Mohabbat. Before that, the 600-MW Ranjit Sagar Dam was
commissioned in 1998.

Padamjit Singh, an expert in the power sector, says that during the
1990s, power was available cheap from the northern grid. “Power
purchase was thus considered a better alternative than setting up
plants. But now power has suddenly become a dear commodity,“ he says.

At present, the peak requirement of power is 8,400 MW, whereas the
availability from all sources is 6,900 MW.