465-MW power pact scrapping led to Rs 2,130-crore loss, says KSEB report

Aryadan had come out with the long-term PPA to avoid load-shedding in future.
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THIRUVANANTHAPURAM : The Annual Administration Report (ARR) of the state electricity board has revealed that the KSEB incurred a loss of more than Rs 2,130 crore due to the cancellation of the long-term 465 MW Power Purchase Agreement in May 2023. The cancellation of the agreement had resulted in the board purchasing power at exorbitant rates from exchanges during peak summer.

INTUC, the Congress-led trade union, has demanded that the loss be recovered from the officials responsible for the cancellation of the pact, rather than becoming a burden on the consumers.

The agreement to purchase 465 MW power at Rs 4.26 per unit for 25 years was cancelled by the Kerala State Electricity Regulatory Commission (KSERC) citing procedural and technical lapses. The pact was floated by former power minister Aryadan Mohammed during the first Oommen Chandy-led UDF government.

Aryadan had come out with the long-term PPA to avoid load-shedding in future.

On May 10, 2023, the KSERC rejected the KSEB’s petition to procure 465 MW power from four power companies -- 115 MW from Jhabua Power Ltd, 150 MW from Jindal Power Ltd, 100 MW each from Jindal India Thermal Power Ltd and Jhabua Power Ltd. Despite the intervention of the KSEB and the state government, a favourable decision on drawing power from these companies on an interim arrangement until alternative methods did not materialise.

“Although the KSERC initially declined approval for 465 MW of power from DBFOO (Design, Build, Finance, Own and Operate basis of Public Private Partnership), it later reversed the decision based on policy directives from the state government.

“However, this reversal did not help as the suppliers were unwilling to reinstate power supply. Consequently, the KSEB had to source power from the market at very high rates, which adversely affected the company’s financial position,” says the ARR prepared by former KSEB Chairman and Managing Director, Rajan N Khobragade.

Currently, the issue is pending before the Appellate Tribunal for Electricity, and a verdict is expected this month itself. P S Prasanth, general secretary, Kerala Electricity Officers’ Confederation (Congress) told TNIE that the board usually takes stringent action against erring officials in the rank of sub-engineers and assistant engineers, who create liabilities. “I have seen their salaries and pensions being stalled for trivial issues by the board. When the board has incurred a whopping Rs 2,130-crore loss due to cancellation of long-term PPA of 465 MW power, the officials responsible should face the consequences.

“The consumers should not be burdened for no fault of theirs,” said Prasanth. In the 2022-23 fiscal, the KSEB had incurred a loss of Rs 1,023 crore after purchasing power at exorbitant rates.

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