KSERC to hear plea on power purchase pact

While the Kerala State Electricity Regulatory Commission (KSERC) is hearing the plea for extending the power purchase agreement between Kerala State Electricity Board (KSEB) Limited and a Kochi-based private generating company on Friday, the stakeholders are yet to reach a consensus on fixing the tariff while renewing the pact.

The commission, which heard the board and the Bombay Suburban Electricity Supply (BSES) Kerala Power Limited on October 28, had directed them to evolve a consensus on the tariff and report for hearing on Friday. The issue did not figure at a full board meeting of KSEBL held here last week and both players could not reach a meeting point on contentious issues, mainly the exorbitant rates sought by the company for renewing the pact signed on May 3, 1999 for 10 years. The 10-year agreement is feared to impose a huge financial burden on the board and also lead to a tariff hike.


The company’s insistence to strike a 10-year agreement at a higher fixed cost has virtually put the board in a tight spot. It has also demanded a hike in the cost per unit by Rs.1.90. While the BKPL’s tariff ranges between Rs.7 and Rs.13 per unit, the board can evacuate power from other generating sources at Rs.4 to Rs.5 per unit.

In addition to the variable cost, the company has demanded Rs.67 crore as annual fixed cost to meet the expenses it will incur on shifting to liquefied natural gas (LNG). The board has worked out an alternative two-year agreement and insisted on reducing the fixed cost by 50 per cent. It also clarified that the new agreement could be signed only on its terms and not on the conditions set by the private provider.

The board is the sole client of the naphtha-based power station with an annual generating capacity of 1,100 million units. After drawing about 70 per cent of the power generated at the station in 2003 and 2004, the board consistently reduced its dependency on the station since the tariff was too high compared to other sources. It had not drawn power from the station during the past two years. The current financial position does not permit the board to rely on such an expensive option. It would also eventually force the board to pass on the burden to the consumers either as a tariff hike or power surcharge, sources said.

Agreement between KSEB and Kochi-based private company

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Printable version | May 25, 2020 5:18:01 PM |

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