MSEB justifies rescinding PPA to panel

Sanjay Jog

Mumbai, Nov 5: The Maharashtra State Electricity Board (MSEB) in its presentation before the visiting Parliamentary Assurance Committee (PAC) on Monday justified its decision to rescind power purchase agreement (PPA) and suspend power purchases from Dabhol Power Company (DPC). “Today, despite installed capacity being only about 15,000 mw there is no base load shortage even without DPC,” MSEB said.

According to MSEB, it paid a whopping Rs 3,500 crore for the purchase of 6,700 million units from DPC during May 1999 and April 01 and sold the same power for Rs 1,000 crore at a paltry Rs 3 per unit (by incurring a loss of Rs 2,500 crore). As against this, MSEB had to purchase DPC power at around Rs 7 last year when a competing supply of 2,500 mw was available from eastern region at less than Rs 2 per unit to other states.

MSEB chairman Vinay Bansal accompanied by the state principal energy secretary VM Lal and MSEB officials told the visiting parliamentary assurance committee that the merit order despatch issued by Maharashtra Electricity Regulatory Commission (Merc) required it to draw the most expensive DPC power. The order restricted DPC power purchases to about 250 million units per month, which was about 40 per cent plant load factor (PLF). However, the PPA envisaged the plant as a base load station at 90 per cent PLF.

The committee chairman and former union minister S Venugopal (Telugu Desam Party) after its interaction with the MSEB and state government officials told The Financial Express that “the MSEB has made a presentation on its functioning and also on its power purchase agreement with DPC. They have also submitted the Madhav Godbole committee reports. We will submit these reports to the Government of India.”

Further, MSEB argued that it has been quite punctual in the payment of power purchase bills to DPC and added that it had and would pay interest for delays. However, MSEB pointed out that DPC was correcting monthly availability statements despite admission of shortfall in supply against declaration. DPC has yet to pay rebate served by MSEB for the default on the availability of power.

According to MSEB, it has rescinded the PPA on May 29 for material misrepresentation by DPC. Ironically, other states were unwilling to make base load purchase commitments.

On the implementation of its memorandum of understanding with the Centre, MSEB said that it would complete the installation of 1,672 time of day meters by December, implement 100 per cent metering after tariff correction and introduce computerised billing. According to MSEB, it has reduced the outstanding dues to below one month billing. In addition to this, implementation of Ahluwalia committee report would address another Rs 400 crore of dues.