Punjab to cancel, revisit ‘one-sided’ power purchase agreements signed by SAD-BJP government

Chandigarh [India], July 28 : Chief Minister Captain Amarinder Singh has ordered Punjab State Power Corporation Limited (PSPCL) to cancel or revisit all one-sided Power Purchase Agreements (PPAs) with private companies that are not beneficial to the state.
An official release said that Chief Minister has asked the PSPCL to examine all the Power Purchase Agreements signed by the erstwhile SAD-BJP government with the various Independent Power Producers (IPPs), which were done basically to meet the power demands of the state especially during paddy sowing and summer season.
"He has directed the PSPCL to terminate, revisit all the lopsided PPAs that are not beneficial to the state," it said.
The move comes amid demand by state Congress to cancel such agreements.
Newly-appointed Punjab Congress chief Navjot Singh Sidhu had met the chief minister on Tuesday and gave him a letter outlining five "priority areas that government must act upon immediately" from Congress high-command's 18-point agenda for the state which will go to the polls early next year.
The letter said that Congress government in the state must fulfill its "2017 election promise by cancelling the 40 power purchase agreements without any of the loss to the state exchequer".
Sidhu has raised the issue of PPAs earlier too.
The Punjab government release on Wednesday said PSPCL had signed 14 PPAs with thermal/hydro and 122 Long Term PPAs with solar/biomass plants after 2007 to make the state power surplus with generation capacity of around 13,800 MW.
"He has ordered PSPCL to cancel or revisit all the one-sided PPAs with private companies that are not contractually obligated to supply sufficient power to meet the state's peak demand during the paddy sowing and summer season," the release said.
Taking serious note of fiasco relating to Talwandi Sabo Power Limited (TSPL), Mansa - one of the largest private thermal plants in the state, "which miserably failed to perform in the current paddy season", the Chief Minister directed PSPCL to revoke its PPA, which "is heavily biased in favour of the company".
The release said that in this current paddy season, all three units of TSPL failed to generate power for few days during the peak paddy season.
It said that one unit of TSPL failed completely to operate from March 2021 and two units "remained out of power generation" for the last one month.
At present, only one unit of TSPL is operational, the Chief Minister said, adding that these factors have caused huge power shortage in the state.
The release said PSPCL has already issued notice to TSPL by imposing the penalty but as the PPAs are one-sided, the penalty imposed will be very meagre in comparison to the losses caused by the failure of these thermal plants.
As per the provisions of the PPAs, at present, it is not compulsory for the IPPs to supply power during peak summer/paddy period.
"Hence, taking advantage of the loopholes in PPAs, the IPPs are claiming full fixed charges from PSPCL by supplying power in the off-season when the state requires it the least," the release said.
The Chief Minister pointed out that to meet the deficit resulting from the failure of TSPL, with a capacity of 3x660MW (1980MW) to meet the state's critical power requirement in the ongoing season, PSPCL had to purchase short-term power from the Power Exchange.
PSPCL had procured 271 crore units of power in the months of June and July by spending Rs 886 crore.
The release said it was also forced to utilize full power from the central sector generating stations so that the crops of the farmers could be saved,
The state was also compelled to enforce power regulatory measures from July 1 to July 11 on Large Supply industry to meet the rising demand of the farmers.
This, the Chief Minister said, not only resulted in inconvenience to the various consumers of the state but also imposed additional financial burden on the financially-crunched PSPCL.