Need authority to cancel power purchase pacts: Kejriwal

On June 12, the DERC had hiked tariff by up to 6% to compensate the discoms for rise in power purchase cost

Delhi Chief Minister Arvind Kejriwal today said the capital may see "further cuts" in power tariff if the Centre gives his government the authority to "cancel" the existing power purchase agreements with electricity generating companies, entered into by the Sheila Dikshit dispensation.

He said Delhi was getting 24-hour power supply and that AAP government's decision earlier this year to slash power tariff by "more than half" have brought relief to the common men.

"This is possible only under a honest government," he said, adding "Power Minister Satyender Jain has calculated the costs and has concluded that costs may further come down."

He said long-term power purchase pacts will have to be scrapped to bring down the power rates.

"Power is being bought at Rs 5/unit in Delhi at the moment. Many companies have offered us Rs 2.5/3 per unit in 5 year agreements. But previous governments have entered into 30-year-long agreements. I urge Union Power Minister Piyush Goyal to cancel those agreements," he said.

According to Delhi Electricity Regulatory Commission, the three private power distribution companies in the city have been buying 95-98 per cent of power as per provisions of the long-term power purchase pacts signed between erstwhile Delhi Vidyut Board (DVB) and various power generators including state-run NTPC.

Power experts said Delhi discoms have to incur 60 per cent more cost on buying power compared to other states because of the long-term power purchase.

The DVB, which used to supply electricity in Delhi, was disbanded in 2002 as part of reforms in the power sector. However, the private power distribution companies were made to comply with various pacts DVP signed with central government entities.

The cost of buying power has increased primarily on account of an increase in the input prices of raw material like coal and gas, officials said.

According to official figures, around 80-90 per cent of total revenue of discoms goes into purchasing power from central and state government-owned entities through long-term power purchase agreement, at rates determined by the central and state regulators.

On June 12, the DERC had hiked tariff by up to six per cent to compensate the discoms for rise in power purchase cost. The AAP government had strongly criticised the DERC for the hike.

Power tariff was a major issue for AAP during the Delhi polls. The Kejriwal government had in February announced a 50 per cent subsidy on monthly power consumption up to 400 units till the government receives the CAG report on financial condition of the discoms.