CENTRE PLANS LAW AGAINST PPA VIOLATION

While Discoms in many states, including TS and AP, are trying to cancel the long-term Power Purchase Agreements (PPAs), the Central government is planning a legislation against this.

The Union power ministry has proposed to give more powers to the regulatory authorities to prevent violations by Discoms and power generation companies.

Union Power Minister R.K. Singh recently announced that the ministry wanted to strengthen the regulators and make them more independent. He said that the ministry wanted the regulators to have the power to penalise power distribution companies for not honouring the power purchase agreements. Discoms have signed PPAs with power generation companies based on their requirements. PPAs are valid for 15 years. In the last three years, significant changes have taken place in the power sector. The cost of power drastically reduced. In the open access system, power is available for `3 per unit. According to the PPAs, Discoms are purchasing power more than `6 per unit. Many Discoms have stopped renewal of the PPAs after they expired. Some are trying to cancel the existing PPAs.

In Telangana, Transco is purchasing power from Neyveli thermal power project in Tamil Nadu at a cost of more than `6 per unit. Transco has written to the TS Electricity Regulatory commission, seeking permission to cancel the PPA with Neyveli power project.

Discoms in Andhra Pradesh, Madhya Pradesh, Maharashtra and Tamil Nadu have been identified by the ministry of power as key defaulters with payment delay.

According to the power ministry, the total dues by Discoms reached `2,000 crore till June 2017.

According to the power ministry, the total dues by Discoms reached `2,000 crore till June 2017.