Power purchase bill up 4 times in 2 yrs
Umesh Dewan
Tribune News Service

Patiala, May 13
Despite the fact that many states in the country are enhancing their power generation capacity by following the mixed approach of setting up new thermal plants under the state and private sector, Punjab is mainly focusing on awarding power generation projects to private players and that too without the competitive bidding route as per the guidelines of the national tariff policy framed under the Electricity Act, 2003.

Power sector expert Padamjit Singh says a thermal plant in a state sector is of paramount importance and in the overall interest of the consumers and the state. Power projects being awarded to private players would lead to costlier power and put additional financial burden on the consumers, he added.

After commissioning of the 420-MW Lehra Mohabbat Thermal plant in 1998, the Punjab Government managed to add power generation capacity of just 500-MW in the past 10 years in the form of commissioning of the Lehra Mohabbat Stage-II in 2008.

Since the peak demand of power in the state has increased from 7,100-MW to 10,471-MW, to bridge the gap between the demand and availability, the Punjab Power Corporation had resorted to heavy power purchase at exorbitant rates (see table).

Documents in possession of The Tribune show that the short-term power purchase bill has increased from Rs 542 crore in 2005-06 to Rs 2,285 crore in 2007-08 - a four-fold increase in just two years. The average rate of power also went up from Rs 3.24 per unit to Rs 7.12 per unit in just three years.

“Precious funds, which could have been utilised for setting up new generation capacity, were, instead, utilised to buy high cost power from the market that resulted in putting the erstwhile Punjab State Electricity Board (PSEB) - now the power corporation into a debt-trap,” said a senior officer of the Punjab State Power Corporation Limited (PSPCL).

Meanwhile, a survey of the capacity addition projects in various states shows that hardly any state (except Punjab) has adopted the policy of ignoring the capacity addition in the state sector and depending totally on the private sector by awarding new thermal power projects through the memorandum of understanding (MoU) route.

During the past couple of years, the state government was on a thermal power projects awarding spree to private players. The government had awarded projects with a combined generation capacity of 5,320-MW to different private players and the estimated cost of these projects was approximately Rs 26,600 crore. However, when the PSEB Engineers’ Association made efforts, the state government announced to set up a 1,320-MW thermal plant in the state sector at Mukerian near Hoshiarpur in June last year. Now, almost a year has passed but there is no headway as far as the Mukerian plant is concerned.

Underlining the importance of setting up thermal power plants under the state sector, PSEB Engineers’ Association president HS Bedi said private sector thermal plants would tend to operate at the maximum capacity, irrespective of the grid or state power requirements, which would lead to dumping of unwanted high-cost private sector power on to the PSPCL during low demand periods, which would cause heavy financial loss to the state and would also increase the burden on the power consumers of Punjab in terms of increase in power tariff. “We strongly demand that 1,320-MW thermal plant at Mukerian be executed without further delay,” he added.

Senior officers of the two power utilities are also of the opinion that capacity of existing thermal plants should be augmented by adopting super-critical technology. “Since lower power tariff are achieved by awarding new power projects through competitive bidding as compared to the MoU route, the Punjab power generation policy needs to be reviewed and the MoU signed with the private players should be scrapped,” are some of the resolutions, passed unanimously by the Association.