No PPA hurdle! State-run companies can sell power from cheaper units

By: |
Shimla | Published: July 4, 2018 5:20:32 AM

Cost saved from this process will be shared between states and the central generation companies

power sector, power industryThe problem of coal supply shortage at power plants haunted the conference with western states such as Rajasthan, Gujarat and Haryana flagging the issue.

The power ministry is set to allow government-owned power generation firms to supply less expensive power from their preferred plants to the distribution companies (discoms), even if the PPA is linked to other (more expensive) plants.

Currently, power companies can sell electricity to the discoms only from the specific power plants identified in the power purchase agreements (PPAs). “The cost savings made from this process would be shared between the states and the central generation companies,” Union power minister RK Singh said at the conference of power ministers of all states held here on Tuesday.

Some of the newer power plants of state-run NTPC such as Bongaigaon and Barh sell electricity to Assam and Chattisgarh at high tariffs ranging between Rs 5/unit-Rs 6/unit. However, many other older plants of NTPC have very low power tariffs, bringing down its average power price at `3.23/unit, which is 8.5% lower than the national average rate of thermal power. The introduction of the PPA rationalisation scheme can turn to be beneficial for the discoms, but the proposal would be weighed on the comments and suggestions received from all the stakeholders.

The problem of coal supply shortage at power plants haunted the conference with western states such as Rajasthan, Gujarat and Haryana flagging the issue. Singh said that the shortage scenario, which can persist for another 2-3 years, reflects higher power demand coming from a growing economy and rising incomes. The power ministry is in constant touch with coal and rail ministries to address the situation and is looking for ways to expedite construction of railway sidings and receiving clearances for coal mining. The minister said that his office has allowed states to import coal to meet their demand. Plans to increase railway rake manufacturing to ease the supply scenario are also being mulled.

Singh also expressed his discontent over the underutilisation of funds disbursed by the central government to strengthen the electricity distribution infrastructure through the Integrated Power Development Scheme (IPDS) and the Deen Dayal Upadhyay Grameen Jyoti Yojana (DDUGJY) schemes. He said that the government wants to completely shift to prepaid smart meters for all consumers to ensure power connection to the poor and curtail the high-handedness of the agencies responsible for billing electricity connections.

The other major issues discussed in the conference included charting state-wise plans to implement the 100% household electrification scheme (Saubhagya) by the end of 2018 and ensuring round the clock power supply by April, 2019. The proposed amendments to the Electricity Act and the national tariff policy were also in the agenda.

(Travel for this report was sponsored by power ministry)

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.