| Although the PPAs were signed for a period of 20 years, the government has revised them in less than 10 years, leaving the private power players in the state a disillusioned lot. According to the PPA, the power companies operating in the state can sell electricity only to the GEB and no one else within or outside Gujarat. |
| The re-negotiated PPAs will be in effect from July 1, 2003. The five IPPs operating in the state include three state government-run companies "" the Gujarat Industrial Power Corporation Ltd (GIPCL), Gujarat State Electricity Company (GSEC), Gujarat State Electricity Generation (GSEG) "" and two private sector electricity producers "" Gujarat Paguthan Electricity Company Ltd (GPECL) and Essar Power, all of whom supply power to the GEB. |
| "The state government in 1994 had signed PPAs with the five IPPs for 20 years. The companies are supplying electricity to the GEB at higher rates but during renegotiation, they have agreed to supply electricity to GEB at cheaper rates," said minister of state for energy Saurabh Dalal. |
| With the new PPAs in place, the GEB will save Rs 240 crore on power purchase from GPECL, Rs 62 crore from Essar, Rs 94.044 crore from GSEC, Rs 73.075 crore from GIPCL and Rs 25.21 crore from GSEG. "Thus, the GEB will save a total of Rs 495 crore a year," said Dalal. |
| The minister said GPECL has agreed to slash the rate from Rs 1.73 per unit to Rs 1.20 per unit and Essar Power has reduced the rate from Rs 1.62 a unit to Rs 1.30 a unit. "The government, through negotiations with GPECL and Essar Power, has saved Rs 302 crore yearly for the GEB," said the minister. |
| The minister said this will improve the financial condition of the GEB. The state government had stopped making full payments to the companies much before the PPAs were revised. IPPs have invested over Rs 6,000 crore in the state so far. |
| "The tariff has been revised keeping in mind the lower interest rate regime prevailing now. Essar Power has restructured its loan and the benefits derived will get passed on to GEB," A K Shrivastava, managing director of Essar Power, said. |
| "As it is, there is a perennial shortage of power in the state and except Ahmedabad and Surat, where electricity is supplied by a private group, other areas have to face power cuts. In case these IPPs close down production, there will be a shortage of at least 900 MW a day," said an industry expert. |
| He said private players invested in the state in good faith, without seeking a central government guarantee and they are now being given a raw deal. The government is also claiming a rebate of 2.50 per cent even in the case of late payments. |
| The rebate is offered to the government only if payments are made on time, said sources. About a year ago, the state government had informed all the energy producers that it wanted to re-negotiate terms and conditions of the PPA with companies. Although the PPAs are for a term of 20 years, they can be changed if mutually agreed by both the parties. |
| In the same month, the government filed cases against all power companies with the Gujarat Electricity Regulatory Commission (GERC) charging that they are not abiding to terms and conditions. |
| There has not been a single hearing on the case so far. |
| While GERC had no chairman for a year until May this year, there has been no progress in the case even after G Subba Rao, who retired from the service, was appointed to the post. |
| According to statistics, the profits of IPPs do not exceed 20 per cent and these companies are finding it difficult to operate as the government has unilaterally been deducting around Rs 30 crore from the total payment of IPPs for the past one year. |
| GEB collects around Rs 800 crore a month, but is still a loss-making body. |
Top Section
Explore Business Standard