Bengal to end some power purchase pacts

West Bengal State Electricity Distribution Company has had 10% surplus power for two years

With West Bengal turning a power surplus state, partly due to a lack of industrial activity, the state government has started the process to cancel some power purchase agreements (PPAs) totalling 1,000 megwatts (Mw).

According to officials in the state power department, PPAs with JSW Steel, Adhunik Group, Lanco Infratech and Ind-Barath Power Infra  are being cancelled. “We have given these letters. In most cases, the projects are delayed. Also, the state does not need this much power,” said an official.

Sources said the PPA with JSW Steel has been cancelled. The single largest investment in West Bengal, JSW Steel's Rs 35,000-crore project at Salboni, comprised a 10-million tonne steel plant and 1,620-Mw power plant. Last year, the West Bengal government and JSW Steel had reached an understanding that work on the power project would be taken up first since the steel plant was held up due to want of ore.

The first phase was to have a capacity of 600 Mw. The company signed a PPA for 300 Mw. That has been cancelled, state government officials said.

Adhunik, Lanco and Ind-Barath, too, had PPAs for 300 Mw, 150 Mw and 250 Mw, respectively. These are in the process of being cancelled.

“West Bengal is power surplus. There are some projects of the state power utility coming with NTPC's Katwa project,” said an official. Two units of 500 Mw each of West Bengal Power Development Corporation at Sagardighi, 250 Mw of Durgapur Projects, Calcutta Electric Supply Corporation’s two Haldia units of 300 Mw each are some of the additions to take place.

West Bengal State Electricity Distribution Company has had 10 per cent surplus power for two years.

In the period, 30,000 million units entered the discom. It sold 3,000 million units every year to the power exchange.

Also, the state is exporting 250 Mw to Bangladesh.

Officials in the state power department say the industrial demand, 40 per cent of the total power consumption in Bengal, has not gone up in the last year as expected, contributing to surplus power.

While the demand from domestic consumers grew 19 per cent in 2012-13, the demand from industry grew four per cent the last financial year. In the previous two financial years, power consumption by industry in the state had registered a growth of 10 to 12 per cent a year.

“In such a scenario, it would be a burden on the state discom to continue with the PPAs. Also, the cost of power is higher in these cases compared to state-owned generation companies’ power,” an official said.