Govt may reassess power purchase deal with BKPL

Published: 30th May 2016 03:46 AM  |   Last Updated: 30th May 2016 03:46 AM   |  A+A-

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THIRUVANANTHAPURAM: The new LDF Government is likely to take a re-look at the UDF Government’s decision to renew the power purchase agreement (PPA) between Kerala State Electricity Board (KSEB) and the Kochi-based power plant BSES Kerala Pvt Ltd (BKPL).

Recently, the KSEB had approached the Commission for renewing the PPA for two years following a government decision, but Left trade unions in the KSEB were strongly against it calling it detrimental to the state’s interests. The commission has scheduled a hearing on the KSEB’s petition on June 22.

The original 15-year PPA with BKPL - which runs a 165 MW naphtha-fueled power plant at Udyogamandal - ended on October 31, 2015. The controversy over renewing the PPA centres on the fixed cost payable to BKPL. The KSEB had paid an exorbitant sum as fixed cost to the private company - roughly Rs 1,490 crore between 2001 and 2015 - even though power procurement from the plant was minimal. KSEB uses the plant as a stand-by because of the high cost of electricity generated here.  Top KSEB officials said the KSEB, in its petition to the commission, has recommended 28-29 paise per unit as the fixed cost. BKPL, had originally proposed above 80 paise. “The final decision has to be taken by the government. The final decision of the commission will be discussed by the board of the KSEB. The policy decision taken by the board will be conveyed to the government for a final decision,” N S Pillai, Director (Finance), KSEB, said.  Trade unions in the KSEB have warned that the deal would incur a massive liability on the state and the power utility. The KSEB Officers’ Association had demanded the commission to hold a public hearing before taking a final decision. In March, the AITUC-backed Kerala Electricity Workers’ Federation sought a detailed investigation into the ‘deal’ alleging that it would financially cripple the state-run power utility.

Though the KSEB and BKPL approached the commission last October seeking permission for the renewal, the commission declined to entertain the petition saying it was not in order. In February this year, the state government approved the proposal to renew the contract for a further two years.

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