The Kerala State Electricity Regulatory Commission has extended till December 31 this year an ‘interim arrangement’ whereby the Kerala State Electricity Board (KSEB) can continue to procure power under four ‘unapproved’ Design, Build, Finance, Own and Operate (DBFOO) contracts to avert a crisis in supply.
In a late-night order Monday, the commission said the interim arrangement is being allowed till December 31, or till the KSEB makes arrangements to procure 500 MW round-the-clock power on medium-term basis, whichever is earlier.
The commission said it was aware of the ‘‘critical power situation of the State due to the failure of (the southwest) monsoon’‘ and that the KSEB is likely to take some more weeks to finalise the medium-term tender for procuring the 500 MW in lieu of the unapproved DBFOO contracts.
The commission had held a hearing on Monday morning on a KSEB petition seeking the extension. In May this year, the commission had declined to give its approval for the contracts with Jhabua Power Ltd, Jindal India Thermal Power Ltd., and Jindal Power Ltd. But it allowed the KSEB to continue to procure power from them for 75 days until alternative arrangements were in place.
This ‘grace period’ expired on Monday (August 21). The State government had given a letter to the commission supporting the KSEB plea.
In Monday’s order, the commission noted that the interim arrangement will be subject to the final decision of the Appellate Tribunal for Electricity (APTEL) on the commission’s May 10 order declining approval for the contracts.
Reason for crisis
The commission further noted that the present crisis is not due to the rejection of approval for the power supply agreements (PSA) of the unapproved DBFOO contracts. ‘‘The main reason is the failure of monsoon clubbed with reduction in internal hydel generation, increase in electricity demand due to the hot and humid climate in the State due to failure of monsoon, reduction in availability of power from Central Generating Stations, reduction in availability of wind power in the southern States due to the reduction in wind on account of failure of monsoon etc.,’‘ it said.
In its submission before the commission, the KSEB had pegged the increase in power purchase costs due to the failure of the monsoon and reduction in availability from central generating stations (CGS) and the unapproved contracts at ₹58.18 crore in July and ₹153.54 crore in August.
The commission also criticised the KSEB for failing to appraise it of the power shortages anticipated due to the weak monsoon, the additional liability incurred that was likely to be incurred under the unapproved DBFOO contracts and without them.
