The special economic and comprehensive package ‘Atmanirbhar Bharat Abhiyan’, unveiled by the finance minister, Nirmala Sitharaman in 5 tranches during May 13 – 17, 2020, has two components that have a crucial bearing on the fledgling power distribution companies – commonly known as discoms. The discoms – mostly owned and controlled by state governments – procure power from independent power producers [IPPs] and public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC] besides their own generating stations and sell to consumers. The first component under the first tranche provides for a special loan of Rs 90,000 crore from Rural Electrification Corporation [REC], Power Finance Corporation [PFC] to discoms to enable the latter clear their dues to IPPs and PSUs....
More
8 comments
Category: Power purchase agreements (PPAs)
Discoms on the ventilator, how long?
The power distribution companies [discoms] are the core of the electricity supply, transmission and distribution chain in the country. Mostly owned and controlled by state governments, the discoms source power from independent power producers [IPPs], public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC] etc besides their own generating stations. Yet, these have been in the news for all the wrong reasons in particular, increasing losses, galloping debt and rising dues to IPPs/PSUs etc. During 2015-16, the combined loss of all discoms was about Rs 52,000 crore even as their debt had reached a colossal about Rs 400,000 crore. Under an unprecedented financial restructuring packages [FRP] orchestrated by the Centre, the state governments took over 75% of this debt...
More
Comments are closed
Discoms – a 4th bail-out package in the offing
Even as there is incessant talk from top echelons in the ruling establishment of electrifying all villages in the country and making power available to each and every household for maximum duration in a day, the most crucial wheel required for making this happen and which must run smoothly at the desired pace has got stuck. The irony is that the political brass is only paying lip service to the urgent need for extricating it. The reference here is to the power distribution companies [discoms] – mostly owned and controlled by state governments which procure electricity from the independent power producers [IPPs], public sector undertakings [PSUs] viz. National Thermal Power Corporation [NTPC], Damodar Valley Corporation [DVC] etc besides their own...
More
Comments are closed
Boost renewable but not at the cost of existing non-renewable assets
During an interactive session at Bloomberg Global Business Forum [GBF] on September 25, 2019 coinciding with the United Nations General Assembly [UNGA], Prime Minister, N Modi faced a dilemma on the issue of clean energy versus coal based power. Even as Modi reiterated his commitment to rapidly promote use of renewable energy viz. solar, wind, bio-mass, small hydro [India has more than doubled its original goal of having 175,000 mega watt (MW) of power capacity on renewable to 450,000 MW; it is also the founder of International Solar Alliance (ISA) jointly with France with 121 countries having already joined the ISA], he was confronted by CEO, Bloomberg on what plans he has with regard to use of coal [India has...
More
No comments
Powerless, cosmetic moves
Given the extant tariff policy and Power Purchase Agreements, the Centre’s plans to reform PPAs to provide power at competitive prices and make discoms viable fall far short The Union Government has set up a committee to reform Power Purchase Agreements (PPAs) to ensure power availability at competitive prices and make distribution companies (discoms) viable. A PPA is a contract between a generation company (genco) and discom which lays down the terms of electricity purchase by the latter from the former, including the tariff, which is subject to approval by the State Electricity Regulatory Commission (SERC). The Cabinet is also considering a new tariff policy which will inter alia require discoms to pay a surcharge to the genco for delayed payment, which...
More
No comments
Reform PPAs, stop fleecing consumers
The government has set up a committee to reform power purchase agreements [PPAs] [it is a contract between generators and power distribution companies (PDCs) setting the terms of electricity purchase by the latter from the former even as the tariff is approved by the state electricity regulatory commission (SERC)] in a manner as to make power available at ‘competitive price’ and give relief to consumers. The move looks laughable when seen in juxtaposition with the extant tariff policy environment as also the position on ground zero with regard to the architecture of PPAs already signed. On tariff policy, under directions from the state governments [they own and control PDCs], PDCs sell electricity to certain category of households and farmers at...
More
No comments
Ailing discoms render industry uncompetitive
The uninterrupted supply of requisite units of power at competitive rate to industries helps them reduce the cost of production. This along with lower cost of other infrastructure such as transport, storage and handling etc can give them the strength to compete in the domestic and international markets. This will also enable them temper their resistance to multilateral trade agreements such as the Regional Comprehensive Economic Partnership [RCEP] – between the 10 members of ASEAN plus 6 countries outside the group viz. Australia, New Zealand, Japan, South Korea, China and India – which promise manifold increase in access to markets but are stymied by fear of low cost import consequent to elimination of customs duty mooted under these agreements. Yet,...
More
No comments
More than meets the eye
In a power battle between the providers and consumers of electricity, the latter lose, yet again During the first decade of the 2000s, in a bid to boost power generation and to make it available at ‘affordable’ and ‘stable’ price to consumers, the then Government had mooted the idea of ultra mega power projects. Two such plants were bagged by Tata Power Ltd (TPL) and Adani Power Ltd (APL) under tariff-based competitive bidding (TBCB), each with an installed capacity of 4,000 MW and 4,620 MW, respectively. While the TPL is based entirely on imported coal, APL uses 70 per cent domestic and 30 per cent imported coal. Under long-term power purchase agreements (PPAs), they committed to sell to power distribution companies at...
More
No comments
Power battles – the consumer loses, yet again
In a bid to give a boost to power generation in India and make it available at ‘affordable’ and ‘stable’ rate to the consumers, in the first decade of 2000s, the then government had mooted the idea of ultra mega power projects [UMPP]. Two such plants were bagged by Tata Power Ltd [TPL] and Adani Power Ltd [APL] under tariff-based competitive bidding [TBCB] each with installed capacity of 4000 MW and 4620 MW respectively. While, TPL is based entirely on imported coal, APL uses 70% domestic and 30% imported coal. The projects were committed to supply power to state electricity boards [SEBs]/power distribution companies [PDCs] at fixed tariff all through project’s operational life. The tariff in case of TPL was...
More
No comments
Power cross-subsidy – Modi proposes, Kejri disposes
The center has mooted far reaching amendments to the Electricity Act [2003] which after incorporating the comments from states [the draft was sent to them on September 7, 2018 and they have 45 days] will be taken up for consideration and approval in the winter session of the parliament. The 4 key amendments are:- (i) capping the cross-subsidy to consumers within a distribution area to 20% immediately to be followed by complete elimination progressively within 3 years [section-61]; (ii) if a state wants to give subsidy to a particular category of consumers, the same should be given as direct benefit transfer [DBT] [section-45]; (iii) all sale/purchase of power shall be through long/medium/short-term power purchase agreements [PPAs] –– as per a...
More
No comments