Unfazed by opposition's criticism of power purchase at higher rates, UP cabinet on Tuesday, gave its nod to buying over 2100 Mw of power from three companies for 25 years at a rate ranging between Rs 5.58 per unit and Rs 5.84 per unit.
The cabinet also gave a year's extension to work contract of a Spanish transmission company, Isolux Corsan, engaged in construction of transmission lines to evacuate power from three upcoming plants in Uttar Pradesh.
The purchase of power from three companies-KSK Mahanadi, PTC India Limited and Krishnapattanam- happens to come through under the case-1 bidding process that envisages procurement of 6000 Mw of power for a period of 25 years, beginning 2016 up to 2042. Chief secretary Jawed Usmani said while 1000 Mw of power would be purchased from KSK Mahanadi, PTC will wheel out 361 Mw to the state. Likewise, the Krishnapattanam power corporation will be providing 800 Mw of power to the state. In all, around 2100 Mw of power will be purchased from the three external sources to meet the ever growing demand for power in UP. The issue was earlier cleared by the UP Power Corporation Limited (UPPCL) board as well as the energy task force (ETF) headed by UP chief secretary.
Principal secretary Energy, Sanjay Agarwal, said since power will be purchased at a levelised tariff over a long period, the actual cost of power comes down drastically. For example, in the first year (2016-17) the KSK will be providing power at the rate of Rs 4.713 per unit. The PTC India and Krishnapatnam will provide it at Rs 4.784 and Rs 4.436 per unit, respectively. This increases gradually over a period of time and by 2042, the three companies will be providing power at the rate of Rs 9.682, Rs 11.474 and Rs 18.275 per unit, respectively.
The principal secretary said power purchase under the case-1 bidding was sent for law department clearance which did not allow negotiations to be carried out under the stipulated guidelines. He said clearance was also taken by the UP electricity regulatory commission (UPERC). "Had power been purchased every year, the cost would have gone up dramatically,'' a senior UPPCL official said. Agarwal said guidelines for power purchased under the Case-1 have been changed, hence the cost of coal would be computed accordingly in per unit charge. This raised the chances of a further hike in rate of power to be purchased.
At least seven bidders (L-1 to L7) had come forward. The three companies which bid the lowest prices included NSL power (for providing 300 Mw at the rate of Rs 4.48 per unit), TRN energy (for providing 390 Mw at the rate of Rs 4.886 per unit) and Lanco Babandh (for providing 390 Mw at the rate of Rs 5.074 per unit). The state government has already issued a letter of intent to purchase power from these companies. The state cabinet, however, rejected L4-RKM Powergen (for 350Mw) which bid at the cost of Rs 5.088 per unit, due to its failure in meetings the commitments. Usmani said the state cabinet had decided to invoke company's bid bond of Rs 10.5 crore.
Even as the state government gears up to purchase power from external sources, questions are being raised if this would further raise the debt of the state government. Chief minister Akhilesh Yadav, who also holds the energy portfolio, had been blaming the previous Mayawati government of leaving UPPCL cash-strapped by taking loans that resulted in liability of Rs 25,000 crore.
In another decision, the state cabinet gave a year's extension to Spanish company Isolux Corsan to complete laying of transmission lines to evacuate power from power plants. The company was roped in January 2012 and was supposed to finish its work by January 2014. The company, however, was caught in a controversy after it insisted on changing the specification of conductors. The UPERC, however, rejected the demand. In the process the work on the project got delayed. The company was given the work contract of constructing transmission lines to evacuate power from three power plants-Bara, Meja and Tanda.
The company has now been asked to get the work completed partially by December 2014 to evacuate power from at least one Bara unit of 660 Mw. The rest of the work may be done by August 2015 when the other two units of Bara (660 x 2 Mw), Meja and Tanda get operational.
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