Power plants in state sector are better option than purchasing power, say PSEB Engineers

CHANDIGARH : Punjab should go for setting up power plants in state sector instead of relying on private sector projects and purchasing costly power to bridge the gap between power demand and supply.

PSEB Engineers association has made this submission before the Punjab State Electricity Regulatory Commission during the public hearing held at Chandigarh .PSEB has shown in its Annual Revenue Requirement (ARR) for the year 2010-11 that it will purchase worth 5876 crores to maintain the power supply at reasonable level.

Padamjit Singh Patron of the association said that cost of power purchase including UI is the largest component in the ARR of PSEB. To bring PSEB out of debt trap and restore financial health of Board, long term measure need to be initiated so that the major portion of energy requirement of the State is met through long term power purchase agreements and the high cost power purchase through traders or UI is minimized.

Capacity addition is therefore, the high priority area which has to be addressed in the Tariff Order of each year. Since PSEB ARR petition contains the element of power purchase, PSEB must come out with a long term plan/measures to source power from cheaper sources.

As per ARR, PSEB is going to purchase high cost power varying from Rs.7.61 to Rs. 9.28 per unit for the year 2010-11 to bridge the gap between power demand and supply in the state .These purchases are from liquid fired thermal plants at Anta, Auriya and Dadri The total power purchase from the above plants is 37.5 million units, 29 million units and 153.1 million units respectively. The power purchase on short term basis has been put at 3255 million units at Rs. 6.09 per unit.

Padamjit Singh added that while shortage of funds is quoted as the main constraint of capacity addition, high cost power purchase drains out financial resources putting PSEB in to a vicious circle.

The CEA in its Load Generation balance review for 2009-10 (anticipated). Has maintained that in Punjab there will be shortage of power by 15.1 percent and 28.3 percent during peak load.

PSEB should give its action plan for meeting the requirements of energy and MW (Peak) demand on long term basis.PSEB is now depending primarily on private sector for capacity addition with the placement of order for Talwandi Sabo and Rajpura Projects in addition to Goindwal.

In the contracts with private sector date of start of work is from the date of financial closure of the company. The financial closure is linked with market conditions and other financial constraints of the company. It can be said with certainty that the projects get delayed due to manipulations by the companies.

Considering the enormous delay in execution of

oindwal project lingering since 2000, PSEB should disclose the precautions/ safeguards against undue or unlimited delay in Talwandi Sabo and Rajpura Projects. Talwandi Sabo has already been delayed by one year on the excuse of economic slow down.

The CEA in its document "White Paper on strategy for 11th plan\" has pointed out that \" Delay in critical supplies has emerged as the single most important reason for slippages in the 10th Plan. BHEL has already been asked to augment its capacity. A system of liquidated damages (LD) for delay in execution of project may be adopted to ensure timely completion of projects.

The Association has pointed out that when tenders were called for Goindwal project, and project was awarded to GVK, it could not be envisaged that this project would take nearly 10 years to start construction work. PSEB should therefore, be asked to take any additional steps to ensure that the projects now awarded do not suffer excessive delays.
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