Lok Sabha Elections 2019: States to spend more to avoid power cuts during polls

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New Delhi | Published: March 16, 2019 5:27:07 AM

Prices of short-term power depend on a number of seasonal and durational factors.

power sector, power industry, power supply, power tariffWhile the average all-India price at which states procured non-renewable power in FY18 was Rs 3.53/unit, the price range for these bilateral power deals range between Rs 4.45/unit and Rs 8.5/unit.

In the wake of the upcoming general elections to be held in April and May, states have started making arrangements to tie up power supply agreements on a short-term basis for these two months at prices much higher than they normally pay.

While the average all-India price at which states procured non-renewable power in FY18 was Rs 3.53/unit, the price range for these bilateral power deals range between Rs 4.45/unit and Rs 8.5/unit.

In the auctions for such power supply agreements, states such as Maharashtra, Bihar, Chhattisgarh and Haryana seek to tie up a cumulative 5,500 MW capacity for the election months to avoid power cuts. West Bengal has also requisitioned for 500 MW in April under this route, at a price range of Rs 5.10/unit-Rs 7.20/unit.

The average power prices for Maharashtra, Bihar, Chhattisgarh, Haryana and West Bengal in FY18 were Rs 3.63/unit, Rs 3.51/unit, Rs 3.09/unit, Rs 3.62/unit and Rs 3.59/unit, respectively.

According to sources, Uttarakhand and Kerala are also vying to procure about 200 MW each in these months through bilateral arrangements. Uttarakhand is said to be paying between Rs 4.98/unit and Rs 7.45/unit and the same for Kerala is in the range of Rs 6.25-7.03/unit.

To be sure, prices of short-term power depend on a number of seasonal and durational factors. Rates are usually higher if requirements are for few hours in the day. The states would procure electricity on such short-term basis through various power traders.

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Though the prices of spot power in the Indian Energy Exchange have started showing a downward trend (average market clearing price at IEX for February 2019 was `3.08/unit, 4% lower year-on-year), experts have pointed out that states are growing cautious about fluctuating exchange power prices, which had breached the `10/unit mark several times last year due to surge in electricity demand and coal supply issue at a number of power plants.

Sources said stressed power assets such as the 1,320 MW Jaypee Nigrie plant and 1,200 MW Essar Mahan unit are among the lowest bidders for the states’ invitations for bilateral power contracts.

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