Reiterating his Government’s firm commitment to provide quality and uninterrupted power supply at affordable cost to the consumers, the Chief Minister Charanjit Singh Channi on Saturday approved the PSPCL’s proposal to terminate GVK Goindwal Sahib (2×270 MW) Power Purchase Agreement. Subsequently, the Punjab State Power Corporation Limited (PSPCL) has issued termination notice to the company.
Notably, a preliminary default notice has been served by PSPCL to GVK today for cancellation of PPA due to high power cost and falling lowest in the merit order, procurement of energy from GVK that had been restricted only within the range of 25% to 30% during most of the times of a year resulting in higher tariff of about Rs.7.52 per unit for last year.
Pointing out further, CM Channi said that this step had been been taken to safeguard the interest of consumers of the State by way of reducing the burden of costly power.
Divulging details, a Spokesperson of the Chief Minister’s Office said that the basic premise of entering into PPA by GVK with PSPCL was to provide cheaper power to PSPCL. GVK had been generating energy by arranging coal from Coal India Limited under SHAKTI Policy. As per PPA, GVK was required to arrange a captive coal mine but it failed to do so, even after lapse of more than 5 years of synchronization with the grid, he added.
In addition to this, the Spokesman said the capacity charges are being decided by Punjab State Electricity Regulatory Commission (PSERC) based on capital cost of around Rs.3058 Crore, which is equivalent to about Rs.1.61 per unit of fixed cost. Going against this decision, the Spokesperson mentioned that GVK had moved to Appellate Tribunal for Electricity (APTEL) for claiming higher fixed cost to the tune of Rs.2.50 per unit based on claims of capital cost of about Rs.4400 Crore which is pending adjudication.
As per claims made by GVK, the Spokesperson pointed out that variable cost is around Rs.4.50 per unit and fixed cost is around Rs.2.50 per unit. Thus, the total claim of GVK under tariff comes out around Rs.7.00 per unit which increase further due to surrender of its costly power. Therefore, the intention of GVK is clear that it requires to charge higher tariff which is not the basic premise on which PPA was entered into with PSPCL. This has created a commercially un-viable for PSPCL to continue PPA with GVK.
Moreover, the GVK had defaulted for not clearing dues accrued to it timely, against the loans taken by it from various lenders. Consequently, it had become a Stressed Asset and a resolution plan was required to be implemented by GVK which it failed to do so. Accordingly, lenders have approached National Company Law Tribunals (NCLT) for resolution plan for GVK which is under consideration before the Tribunal, the Spokesperson revealed
