Teesta-III a failed example of PPP project, alleges AIPEF

PPP was selling electricity at a discounted rate in open market, as against the contracted rate

All India Power Engineers Federation (AIPEF) today slammed the Teesta-III power project as a failed example of public-private partnership since it is selling electricity at a discounted rate in open market, as against the contracted rate.

The Federation claimed that power produced from Teesta- III power plant is being sold at a rate below Rs 3 per unit in open market after Punjab, Haryana, Rajasthan and Uttar Pradesh refused to buy electricity from it at Rs 6 per unit-- which is the contracted rate.

"Teesta-III -- a failed example of Public Private Partnership. Punjab, Haryana, UP and Rajasthan have refused to accept the high cost power from 1,200 MW Teesta-III hydro project in Sikkim at the escalated tariff of about Rs 6 per unit instead of original Rs 1.92 paise per unit", the Federation said in a statement.

According to the statement, as the four states have refused to buy this high cost power, PTC is selling the entire power at a rate less than Rs 3 per unit because of surplus market conditions.

The 1,200 MW project was commissioned in February 2017. Now, during high flow period up to September, the project is unable to generate beyond 700 MW due to transmission constraints with a continuous loss of 12 Million Units per day valued at Rs 3.6 crore.

V K Gupta, spokesperson of AIPEF, said that the organisation has written to power ministry to expedite the work of completion of transmission system for full utilization of water for power generation.

Central Electricity Regulatory Commission (CERC) has declared the ad-hoc tariff of Rs 6 per unit in its order of May 23 on the basis of petition for escalation of capital cost from Rs 5,705 crore to Rs 13,965 crore including interest charges due to abnormal delay.

The Sikkim government awarded the project to a private consortium led by Athena Projects Pvt Ltd in February 2005.

The entire power from the project was to be purchased by Power Trading Corporation (PTC), which in turn signed contracts to sell 70 per cent power to Punjab (340 MW), Haryana (200 MW), UP (200 MW) and Rajasthan (100 MW).

Due to disputes amongst the private equity holders for getting control of the project, the work remained suspended for two years. About 70 per cent of the project cost was funded by loans extended by Rural Electrification Corporation (REC) and a consortium of public sector banks.

In November 2014, when the project was on the verge of collapse, Government of India intervened to revive the project by increasing equity shareholding of the Sikkim government from 26 to 51 per cent.

The construction of connected transmission lines of the project was also given to the same project developer -- Teesta Urja Ltd subsidiary. While the construction of the project was delayed for over five years, the construction of the transmission lines was delayed even more and only 25 per cent of it could be completed.