KSEB Faces Crisis as Firms Demand Arrears Clearance for Power Purchase Agreement Revival

Amidst the attempt by the Kerala State Electricity Board (KSEB) to seek an extension of the terminated power purchase agreement (PPA) for electricity procurement, uncertainties persist regarding the revival of the agreement due to companies’ arrears demands. The companies have communicated to KSEB that they won’t resume power supply until the outstanding dues, as per the original pact, are settled.

The provisional arrangement allowing power acquisition as per the agreement will conclude on Monday. On the same day, the regulatory commission is set to consider KSEB’s plea to continue procurement from these firms to avert a potential power shortage in the state. A delay in reaching a favorable decision could lead to a 36-megawatt power deficit.

Reports reveal that KSEB owes nearly Rs 300 crore in dues to the companies implicated in the annulled agreement. The commission determined a payment of Rs 4 per unit to the companies amidst contract disputes, which was lower than the initial contract amount. The companies argue that they should receive the original contract-specified payment of Rs 4.15 – Rs 4.29 per unit.

Conversely, the state government advocates for KSEB to explore alternatives, such as operating the Kayamkulam thermal power plant, instead of seeking contract extensions. However, operating the Kayamkulam plant would incur an expense of Rs 12 per unit, along with a fixed charge of Rs 301 crore, whereas presently, only Rs 100 crore is being paid as a fixed charge.

Furthermore, Minister for Electricity K Krishnankutty has arranged a meeting with board authorities to discuss the forthcoming action plan.