Editorial-January 2018

The Haryana government is buying hyper expensive power. A total of 303 MW from three projects of two private developers, DANS (193 MW) and Gati (110 MW) will be bought at a levelised price of Rs 4.66/unit. These are hydro power projects located in Sikkim so a lot would have to be expended in transmission costs as well. Power from DANS projects have been contracted for 25 years and from the Gati project for 35 years. These contracts are worth Rs 19,125 crore. These PPAs have been executed without competitive bidding; tariffs have been fixed without public consultation and by ignoring the tariff discovery of recent competitive procurements. Just as on 16.11.2107, Haryana executed a PPA with JSW Energy. It agreed to buy 176 MW from the Sajjan Jindal firm at Rs 3.02/unit. This too was a tender minus procurement. This means the Haryana state discoms will be paying a whopping Rs 6,751 crore extra to the two private gencos (DANS & Gati) and the amounts will be extracted from the consumers.

Members of the general public raised objections before the HERC on the manner of giving approvals and tariff fixation. They also pointed out to the very competitive IEX rates and easy availability and red-flagged the process on transparency. However, the Haryana government pointed to a union power ministry exemption on competitive bidding for hydropower projects. It also said that it was procuring power under Section 86(1)(b) of the Electricity Act, 2003 and this did not require public consultation. The Haryana government has used these arguments to justify the fixation of high tariff. Section 64 of the Electricity Act, requires public consultation. But its invocation has shown to be meaningless in this case. Equally, it has junked the principle of applying latest price discovery for economic decision-making. HERC has not considered its most recent tariff order for power procurement from JSW Energy.

The government had stated that there is a demand requirement of 500 MW, out of which 300 MW would be purchased through competitive bidding. But so far, there is no movement on this front. Read our cover story for complete details: the project details, the administrative process which the PPAs followed, what HERC has done in different cases and why these two cases are worthy of scrutiny and have the bearings of a scam.