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Sidhu calls upon Punjab govt to direct PSERC to slash tariffs paid to pvt power producers

There are mixed opinions among power experts on whether PSERC has any authority to decide tariff and what is the scope of authority the state government has in issuing any directions in public interest.

Written by Man Aman Singh Chhina | Chandigarh |
August 31, 2021 5:59:08 am
Najvot Singh Sidhu.

PUNJAB CONGRESS chief Navjot Singh Sidhu on Monday called upon the state government to immediately issue directions to the Punjab State Electricity Regulatory Commission (PSERC) in public interest to revise tariff being paid to private power plants, rendering faulty Power Purchase Agreements (PPAs) null and void.

In a tweet, Sidhu argued that this will help the state government give 300 units of free power to all domestic consumers including general category, decrease domestic tariff to Rs 3 per unit and Rs 5 per unit for industry, alongwith redressal of all outstanding bills, waiving of the “unjustifiable and exorbitant” bills.

However, there are mixed opinions among power experts on whether PSERC has any authority to decide tariff and what is the scope of authority the state government has in issuing any directions in public interest.

Speaking to The Indian Express, Darshan Singh Bhullar, former chief engineer with the Powercorp, said that PSERC does not increase or decrease the tariff on its own, rather, it depends on the facts that are presented before it by PSPCL. “It is the PSPCL which presents before the regulator, the data pertaining to its profit and expenditure. Based on scrutiny of the same, the regulator reaches a conclusion regarding the tariff,” said Bhullar. He added that PSERC cannot change the tariff suo motu.

Bhullar added that PSERC cannot interfere in tariff position by itself and if the government wants to supply power at a particular rate, it has to provide the gap in revenue through subsidies. Asked about the effect of the shortfall of subsidy on the financial well-being of PSPCL since the government has been defaulting on it, Bhullar said this sets off a cascading chain which results in PSPCL taking short-term loans to fulfill its financial obligations and this puts more financial strain on the powercorp.

Referring to the move by PSPCL to issue notices to Independent Power Producers (IPPs) to do away with the PPAs signed with them, Bhullar said there is a clause to repudiate from the agreement but this authority does not lie with PSPCL. Referring to the PPAs signed with private producers, Bhullar said that at most, PSPCL can stop paying charges to them.

The relevant clause in the agreements says that, “while it is open for PSPCL to act in a manner which can be treated as Procurers Event of Default, the right of termination resulting from such repudiation is that of GVK (one of IPPs) and it is GVK’s option whether to proceed in terms of the provisions of Article 14.4.5 leading to termination of PPA of 3 years from the eighth day after the expiry of consultation period or to challenge repudiation or press cor specific performance by PSPCL.”

According to Padamjit Singh, retired chief engineer of the Powercorp, the two issues of IPPs overcharge and supply of 300 units of free electricity are “entirely delinked”. “The fact is that the IPPs are overcharging. The state government can give direction to the regulatory commission under the Electricity Act in public interest,” he said.

He added that under Section 108 of the Act, the state government shall be guided by public interest and in this the government’s decision will be final. He said that the government can very well say that in public interest, the tariff be reduced.

This is the second time in recent days that Sidhu has asked for the cancellation of faulty PPAs even though he has been raising this demand for quite some time now. Addressing a gathering in Amritsar two days ago, Sidhu had said, “Faulty PPAs will be cancelled… Removing the burden of fixed charges from over the head of Punjab’s exchequer, power will be given to the people of Punjab at Rs 3 per unit for domestic use and Rs 5 per unit for industrial use, alongwith already provided over Rs 10,000 crore subsidy.”

Sidhu has also been demanding new legislation in the Punjab Vidhan Sabha to cancel the PPAs. He has also accused the former SAD-BJP government of having deliberately signed faulty PPAs. “Badals signed PPAs with thermal power plants and Majithia as minister, Renewable Energy (2015-17), signed PPAs for 25 years for solar power at Rs 5.97 to 17.91 per unit to loot Punjab knowing cost of solar is decreasing 18 per cent per year since 2010 and is Rs 1.99 per unit today,” he had alleged in July in a tweet.

He had said that faulty PPAs have cost the people thousands of crores. “Punjab has paid Rs 3,200 crore just as coal-washing charges due to faulty replies to pre-bid queries before signing PPAs. Private plants keep finding loopholes to file litigation that has cost Punjab Rs 25,000 crore already,” he had said at the time.

Sidhu is also on record asking for a white paper on the PPAs. The same had been promised by CM Capt Amarinder Singh on the floor of the Vidhan Sabha but it has not been brought out till date. Sidhu has claimed that he has been demanding this since 2017, but bureaucratic control of department reduces people-elected ministers to mere showpieces.

Sidhu faces protest by shopkeepers in his assembly constituency

Sidhu faced protest by some shopkeepers in his Amritsar (East) constituency on Monday when he had gone there to inaugurate a development project.

The protesting shopkeepers alleged that the Congress councillor of the area, who is considered close to Sidhu, has been putting pressure on them to vacate their shops and that the MLA refused to intervene in the matter despite repeated requests.

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