The State government will ask the Kerala State Electricity Regulatory Commission to re-examine its decision not to approve a clutch of long-term power supply agreements totalling 465 MW entered into by the Kerala State Electricity Board (KSEB).
The State Cabinet, which met on Wednesday, has decided to invoke Section 108 of the Electricity Act which states that the commission “shall be guided by such directions in matters of policy involving public interest as the State government may give to it in writing.”
Chief Minister Pinarayi Vijayan’s office, in a statement, said the decision to get the contracts restored was taken in public interest so as to avert power shortage.
Agreements in 2014
In May this year, the commission had denied approval for four agreements with Jhabua Power Ltd. (115 MW), Jindal Power Ltd. (15O MW), Jindal India Thermal Power Ltd. (100 MW) and Jhabua Power Ltd. (100 MW) under a 25-year Design, Build, Finance, Own and Operate (DBFOO) mode. The KSEB had entered into these agreements in 2014.
Wednesday’s Cabinet decision was based on a report filed by Chief Secretary V. Venu who was tasked with examining the matter. Harried by a power crisis spawned by a weak southwest monsoon, the KSEB too has been urging the government to press the commission for a review.
Moreover, fresh power supply contracts were proving to be costly affairs when compared to the “unapproved” DBFOO contracts. The latter guaranteed long-term supply at prices ranging between ₹3.99 to ₹4.68 per unit.
The commission had declined approval on the grounds that the KSEB had deviated from the Union Ministry of Power guidelines. With the weak monsoon pushing the State into a power crisis, the commission, however, was forced to permit the KSEB to continue procuring power from the “unapproved contracts” until alternative arrangements were in place.
Rates too high
Although the KSEB invited fresh bids for short and medium-term supply of power, the rates had proved to be too high. The rates quoted by suppliers were ₹6.88 per unit for medium-term supply and as high as ₹6.95 to ₹7.87 per unit for short-term supply.
The CPI(M)-backed KSEB Officers’ Association (KSEBOA) has welcomed the Cabinet decision. The commission’s decision to scrap the DBFOO contracts would have pushed the State into a power crisis and burdened the KSEB and its consumers with financial liability, the association said.
