UP signs 600 MW PPA with Gujarat & Adani Power…

 According to reports the Uttar Pradesh Government has entered into a year-long power purchase agreement (PPA) with the Gujarat government and a private utility Adani Power for 600 MW of electricity.

The UP Government’s move of one year PPA seems for political gains as state elections are to be held next year, but it has also helped narrow the demand-supply gap.

 

As per a report of the Central Electricity Authority

, the state received 6,028 MW of power in June against a requirement of 6,564 MW.

 
The PPA comes at a time when Gujarat is facing a problem of plenty in terms of signing the PPA for its own consumption (Read Here). There are few takers for its 3,000 MW of surplus power, which is set to double in the coming months as private power producers add capacity.

Adani Power's average realization dipped to as low as 2.82 a unit in the first quarter of the current fiscal, as against 3.36 in the corresponding quarter of the previous fiscal. Under the PPA, it will get 4.70 for every unit sold, including transmission charges.

 
Uttar Pradesh, on the other hand, is one of the largest buyers of power in bilateral trade and power exchanges. According to the data published by the Power Exchanges (Indian Energy Exchange and Power Exchange of India), it also pays one of the highest tariffs in the country to procure it. In May, the state accounted for 20% of bilateral power trade, against only 3.8% in 2010 and 5.5% in 2009.

This politics-power nexus may prove to be a bonanza for voters, some of whom may be reluctant to pay a higher price for electricity, but it has its down side: It hampers effective check on power theft and slows down privatization of power distribution. This explains why Gujarat-based Torrent Power will have to wait longer to take over Kanpur's electricity distribution network.