The Kerala State Electricity Board (KSEB) is getting into the big league in the matter of power purchases. Long-term planning is taking front seat with the power utility signing one 25-year Power Purchase Agreement (PPA) recently and all set to invite bids for another 25-year PPA in the next few days.
“This is the first time in its history that the state-run KSEB is going in for such long term agreements,” KSEB chairman and managing director M Sivasankar said. “With such PPAs, the benefit is that we will have a power plant practically dedicated to us. Other states such as Tamil Nadu are also going in for similar agreements,” he said.
According to KSEB director (Finance) S Venugopal, the power utility has signed a 25-year agreement with Maithon Power Ltd, which is a joint venture by the Damodar Valley Corporation (DVC) and Tata Power.
By next week, the KSEB will float tenders eyeing another 25-year PPA with power generators.
PPAs for the KSEB have never gone beyond the three to four year PPAs up to now.
“The benefit is we will have a control over the cost of power. At present, we are spending 60 to 70 per cent of our annual budget on power purchases,” he said.
“Additionally, long-term purchases get priority in the allocation of space on the inter-state transmission lines- transmission corridor in power parlance. Such long-term agreements are also good for the stabilisation of industry in the state for which power supply is required on a large scale,” Sivasankar said.
In the meantime, short-term contracts are also being signed to cover the immediate needs. In addition to the agreements for covering the 2014 summer, the KSEB has also invited bids for the supply of 300 MW on short term basis for the period between June 1, 2015, to May 31, 2016.