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Punjab: Amarinder Singh cracks the whip, orders cancellation of all controversial PPAs

Taking serious note of the fiasco relating to Talwandi Sabo Power Limited (TSPL), Mansa, which miserably failed to perform in the current paddy season, the CM has directed PSPCL to revoke the power plant's PPA, which is heavily biased in favour of the company.

By: Express News Service | Chandigarh |
July 28, 2021 10:51:39 pm
Taking prompt cognizance of the matter, the CM immediately directed the Water Resources Dept to undertake the work at Sivia water channel at the earliest (File Photo)

Punjab Chief Minister Amarinder Singh on Wednesday ordered Punjab State Power Corporation Limited (PSPCL) to cancel or revisit all 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 seasons.

A government statement on Wednesday said that taking serious note of the 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 has directed PSPCL to revoke the power plant’s PPA, which is heavily biased in favour of the company.

Sources said that while the termination notice has been issued to TSPL, a committee of lawyers was formed to look into the issue of PPAs for rest of the thermal plants, which were signed from 2007 onwards. If the lawyers find that the state did not have any legal and financial implications, then these PPAs will either be renegotiated or be cancelled.

“The CM has also asked PSPCL to examine all the Power Purchase Agreements (PPAs) signed by the erstwhile SAD-BJP government with various independent power producers, which were established basically to meet the power demands of the state, especially during the paddy sowing and summer season. He has directed PSPCL to terminate/revisit all the lopsided PPAs that are not beneficial to the state,” the government statement said.

The CM’s action comes days after Advocate General Atul Nanda had stated that the PPAs were one-sided and leaned heavily in favour of private thermal plants. He had also however stated that the drafting of PPAs was done in such a manner that these did not provide any room for the government to renegotiate them, adding that the state government may face legal implications if it tried cancelling them.

The Chief Minister noted that 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 a generation capacity of around 13800 MW. However, in this current paddy season, all three units of TSPL failed to generate power for a few days during the peak paddy season. One unit of TSPL failed completely from March onwards, while two other units remained out of power generation for the last one month, he said. At present, only one unit of TSPL is operational, CM Amarinder Singh said, adding that these factors have caused a huge power shortage in the state.

PSPCL has already issued notice to TSPL by imposing a penalty. But as the PPAs are one-sided, the penalty imposed will be very meager in comparison to the losses caused by the failure of these thermal plants. Further, as per the provisions of the PPAs, at present, it is not compulsory for the independent power producers to supply power during peak summer/paddy period. Hence, taking advantage of the loopholes in the PPAs, the independent power producers have been claiming full fixed charges from PSPCL by supplying power in the off-season, when the state requires it the least.

The Chief Minister pointed out that in order to meet the deficit resulting from the failure of TSPL, with a capacity of 3x660MW (1980MW), PSPCL had to purchase short-term power from the Power Exchange in the present season.

PSPCL had procured 271 crore units of power in the months of June and July and paid Rs 886 crore for the same.

The state power corporation was also forced to utilise full power from the Central Sector Generating Stations so that the crops of farmers could be saved, Captain Amarinder noted, adding that the state was also compelled to enforce power regulatory measures from July 1 to July 11 on large supply industries to meet the rising power demand of the farmers. This, he said, not only resulted in inconvenience to the various consumers of the state but also imposed an additional financial burden on the cash-starved PSPCL.

The cancellation of PPAs was a 2017 pre-poll promise of the Congress party, but the government failed to act on the promise four-and-a-half years fater being voted to power. Earlier, the Mallikarjun Kharge panel had, in its 18 point agenda to the CM, had asked him to fulfil the promise on PPAs. On Tuesday, Punjab Congress chief Navjot Sidhu met the CM and handed him a letter seeking action on five points, including that on PPAs.

Sources said the CM had after that held a meeting on PPAs on Tuesday afternoon and had decided to crack the whip.

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