Bengal pays for missed PPA with DVC

Power-starved West Bengal has failed to conclude the Power Purchase Agreement (PPA) with Damodar Valley Corporation (DVC) for steady supply of 800 MW from its new projects at Andal and Raghunathpur. DVC had initially offered to allocate 600 MW from its Raghunathpur Super Thermal Power Station (2X600 Mw) and another 200 Mw from its Andal power station to West Bengal. Discussions were held between the two parties and draft agreement of the PPA was decided to be exchanged between them in July 2008. But the West Bengal State Electricity Distribution Company Ltd (WBSEDCL) did not pursue it for about 14 months.

By the time WBSEDCL officials started asking for the PPA draft agreement, the DVC had concluded a 30-year PPA with Delhi. It would start supplying power for the Commonwealth Games in 2011 and continue with the arrangement thereafter.

The impact of the missed opportunity could be felt by the fact that the state is now suffering from acute power shortage and this summer the deficit is often 800-900 MW.

Since no major power project is coming up in the next few years, the deficit is likely to go up in the coming years.

Now, the WBSEDCL has resumed talks with DVC and trying to pursue them to reopen the negotiation. One senior official of WBSEDCL, involved in the negotiation, said DVC was constituted by an Act of Parliament as a special purpose vehicle for the development of the DVC command area and to supply the surplus power (if any) to some areas of Bihar (now in Jharkhand) and West Bengal.

That is the reason both the Jharkhand and West Bengal governments are represented in the board of DVC.

Yet, it was apparent that when the DVC authorities took the initiative to enter into an agreement with Delhi for PPA, no objection was raised by the West Bengal government representative there. "A little casual approach by the state government and the WBSEDCL caused this problem," admits the official.

Now, the DVC has offered to enter into a PPA for drawal of 50 Mw from Raghunathpur Stage-1 and another 400 Mw from Stage-2 and the WBSEDCL is working on it. Incidentally, while the Stage-1 of Raghunathpur will be operational from early 2011, nothing has been decided about the Stage-2 as yet.