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Punjab: AG’s year-old legal opinion in focus as govt finalises White Paper on power

Because the controversial Energy Buy Agreements (PPAs) between Punjab authorities and personal thermal crops assume centre stage, a authorized opinion by Punjab’s Advocate Basic Atul Nanda, by which he had raised severe doubts about the entire train behind the PPAs pointing fingers at violations that led to costly energy, is as soon as once more within the focus.

Nanda in his authorized opinion to the Punjab authorities has acknowledged that there was deviation from bidding tips, including that the very quantum of energy required to be procured by the then state authorities was unnecessarily elevated by the state. Nanda has argued that the federal government didn’t must pay fastened costs to those crops when cheaper energy was accessible with the nationwide grid. He has gone on to state that the requirement of energy was enhanced to cross off state’s peak load — throughout paddy plantation — as the common load.

The PPAs are in focus because the state authorities is within the means of finalising a White Paper on the ability state of affairs.

The opinion was submitted to the federal government in February final 12 months, however sources mentioned the draft White Paper readied by state authorities officers has to date not included the authorized opinion. The CM had just lately held a gathering with an intention to overview the White Paper preparation.

Two of CM’s Cupboard colleagues Sukhjinder Singh Randhawa and Tript Rajinder Singh Bajwa rejected the draft White Paper saying the identical officers that had been instrumental in getting ready the PPAs on the time of their execution had been those who had ready the White Paper. The ministers additionally mentioned that the White Paper didn’t repair any duty of the earlier authorities although the AG had clearly pointed fingers in any respect that had gone incorrect. The CM has requested state officers to work on the White Paper once more.

The federal government has been blaming flawed PPAs for costly energy.

These PPAs had been signed between the federal government of Punjab and two non-public thermal plants-Talwandi Sabo Energy Restricted (TSPL) and Nabha Energy Restricted (NPL) by the earlier SAD-BJP authorities. The sustenance allowance paid to those thermal crops, even when the state doesn’t require energy from these entities, is a bone of competition within the state. The burden is handed on to the customers. Punjab is among the many states the place the ability could be very costly.

Nanda, in his opinion, has acknowledged: “There will be no method of doubt that the petitions most well-liked by PSPCL below part 63 of Electrical energy Act, 2003, for approval of tariff to be paid to NPL and TSPL had been primarily based on assumptions/components which had been both false, technically incorrect, opposite to selections taken/approvals given or in any other case opposite to the regulation. There have been impermissible deviations from the 2005 aggressive bidding tips and facets that are required to be corrected/reviewed and remedied and which might then have a big affect resulting in a revised/diminished tariff construction.”

He additionally added that the very quantum of energy required to be procured by the then state authorities was unnecessarily elevated by the state. This led to an extra cost of whole Rs 3,684 crore as give up costs until FY 2019-20 to the non-public corporations and a consequent loss to the state. This has additionally led to elevated gasoline prices of Rs 84 crore. It’s estimated that Rs 400 to 500 crore every year is being handed on to the customers as price on account of imported coal.

As per his opinion, the 17th Electrical Energy Survey which is carried out by the Central Electrical energy Authority, the ability requirement for the state was solely Rs 1,800 MW. As per the bidding tips the demand forecast of a state needs to be primarily based on electrical energy survey carried out by the Central Electrical energy Authority. The rationale is that any pressing/seasonal/further energy required can at all times be bought from the nationwide grid at cheaper comparative charges. There isn’t any have to be burdened with everlasting fastened costs for this.

The state’s requirement for 1,800 MW was first sought to be elevated to three,100 MW in 2007 after which additional by 2,100 MW in 2008. The crops had been ultimately arrange/PPAs entered into on the idea of such further/additional energy requirement which it truly doesn’t want and has not even used. For such energy contacted/however not utilised the state and therefore its customers have needed to pay give up costs which have been to the extent of Rs 1,633 crore to NPL in FY 2012-13 to FY 2019-20 and Rs 2,050 crore to TSPL from FY 2014-15 to FY 2019-20.

With the intention to justify the above enhance in energy requirement, revised figures had been submitted by PSPCL to Punjab State Electrical energy Regulatory Fee primarily based on components which had been erroneous-primary amongst these being peak load calculated by together with additional energy required by the agriculture sector which is definitely just for a interval of 4 months between June to September when the height load rises by about 1,500-2,000 MW. That is between 2-2.5 occasions of the common demand. There was no requirement to arrange producing capability for sustained all 12 months era to fulfill a peak load demand requirement which is simply 4 months. This has resulted in underutilisation of capability for the steadiness interval of the 12 months for which the PSPCL had at present heavy quantities of give up costs to the non-public thermal crops, Nanda has mentioned in his opinion.

Though the seasonal peak demand was solely throughout these 4 months, surprisingly there was no provision within the PPAs to make sure minimal availability throughout these peak demand months. The AG has additional acknowledged that comparable PPAs executed by UP with Lanco Apara Energy Personal Restricted, the minimal availability is graded as per such peak/non-peak intervals. Regular interval is 85 per cent and off peak interval is 80 per cent and in case availability just isn’t met then penalty is leviable on the ability firm. The authorized opinion says that such safeguards haven’t been constructed into the current association with both NPL or TSPL.

Atul Nanda was requested to look at as as to if Punjab can enact laws for “barring or making it unlawful for any non-public operator to hunt cost for energy, whether or not truly bought or not, at charges that are considerably larger, than these accessible within the nationwide energy alternate at that time of time.”

All that’s incorrect with PPAs: what Advocate Basic Atul Nanda opines

  • Tariff to be paid to pvt crops primarily based on false/technically incorrect assumptions
  • State’s precise energy requirement unnecessarily elevated resulting in extra cost to pvt companies
  • Agri demand induced 4-month peak load handed off as state’s common load
  • 2005 aggressive bidding tips not adopted to enter PPAs
  • Improper to pay fastened costs to pvt companies as extra energy accessible from nationwide grid at cheaper charges
  • Value of Rs 400 to 500 cr every year being handed on to the customers
  • No minimal availability safeguard in PPAs for peak/non-peak seasons

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