Will Punjab buy power at higher rates?

CHANDIGARH: Punjab government's move to allow extension of power generation capacities to two private players has raised eyebrows, with experts alleging that this was done without a bidding process. While the state government has amended its power generation, sources say, it is not in keeping with the Electricity Act 2003, passed by the Centre.
The government recently approved an extension of 660 MW to Sterlite Energy Limited to its existing generation capacity of 1980 MW at Talwandi Sabo and another extension of 700 MW to Larsen and Toubro in Rajpura in addition to its existing 1400 MW project without going through any bidding process.The government also did not fix the power tariff for these projects while finalizing the deal.
The Punjab government, however, claims that new 'Power Generation Policy-2010,' approved by the state Cabinet, now allows private players in the power sector to enter Punjab to set up power stations at different locations by simply taking approval from the government and not going through any bidding process.
However, questions are being raised whether such a policy is valid when there is a central law in place.
“Under Section 63 of the Electricity Act, the regulatory commission has to adopt the tariff determined through competitive bidding, if the bidding has been done as per the guidelines issued by the Centre. There is no provision in the Centre's guidelines to award extension units after the bidding has been finalized,” said Padamjit Singh, chairman, All-India Power Engineers' Federation.
“Thus, the nod to extension units at Talwandi Sabo and Rajpura by Punjab is in clear conflict with the tariff policy and the state regulator, which is bound by Section 63. The award of extension units amounts to a fundamental post-tender change of terms, which is illegal. If the government had cleared higher capacities of these generation units during the issuing of tenders, the state would have got lower rates,” said Singh.
Sources point out that the final nod to Sterlite Energy Limited to add one more unit of 660 MW at Talwandi Sabo -- taking its total generation capacity to 2640 MW -- came on the same evening after company representatives held a breakfast meeting with Punjab chief minister Parkash Singh Badal.
Sources say, with the bidding process given a go by, the state has also lost out on cheap rates. While L&T's rate for Punjab is Rs 2.84 per KWH, Sterlite Industries Limited is offering at 2.89 per KWH. This is in sharp contrast to Punjab State Power Corporation Ltd own rate of Rs 2.26 per KWH. With power being surplus at present, the rate which Punjab could have got in case of open bidding, is Rs 1.90 per KWH.