Terminating the four long-term power supply agreements signed by the Kerala State Electricity Board (KSEB) in the Design, Build, Finance, Own and Operate (DBFOO) mode, in addition to triggering a power shortage, would also have required the utility to pay close to ₹500 crore in damages.
The State government had communicated this aspect of the issue to the Kerala State Electricity Regulatory Commission in October while asking it to reconsider its May 10, 2023 decision not to approve the 25-year contracts totalling 465 MW.
“In case of termination of agreement by the utility, as per clause 31.3.2 of the DBFOO power purchase agreement, the KSEB will be liable to pay damages. The termination payment of the four unapproved contracts amounts to approximately ₹500 crore,” the October 10 letter from the Additional Chief Secretary (Power) to the Secretary, Regulatory Commission, notes.
