State govt's power purchase deal with UPCL illegal, expensive'

Udupi, Mar 9: Executive President of Jana Jagruthi Samithi, Nandikooru, Balakrishna Shetty accused the Yediyurappa Government of purchasing power from Udupi Power Corporation Limited (UPCL) without fixing the unit price and without an approved Power Purchase Agreement ratified by the Karnataka Electricity Regulatory Commission, as per the applicable laws.

In a press release, Shetty said that without the power purchase agreement between the power project and the government and without such agreement duly approved by CERC and ratified by the KERC the UPCL has no right to produce power and the plant should immediately shut down on this ground as well.

He said that information received by the Samithi from both the regulatory authorities - Central Electricity Regulatory Commission, New Delhi (CERC) and Karnataka Electricity Regulatory Commission, Bangalore (KERC) - reveal that neither the tariff has been approved by the CERC nor the KERC ratified the Power Purchase Agreement. The purchase of power obviously is made illegally at a high price by the government utility, the Power Corporation of Karnataka Limited and KPTCL.

The project is approved as the mega-power project and qualifies for various benefits like custom duty exemption and certain tax holidays etc. As the project is to supply power to more than one State the tariff is required to be decided by the CERC. It may be recalled that CERC had granted in-principle approval of the capital cost at Rs 4299.12 crores in October 2006 based on the equipment supply by BHEL. The UPCL terminated the agreement with BHEL and purchased far cheaper and perhaps reconditioned equipments without any guaranteed life span from Dong Fang of China.

The cost of the project based on other projects that used Chinese equipments should not be over 3720 crores for the increased capacity of 1200mw. The former Managing Director of KPTCL Bharat Lal Meena has stated that the company should reduce the project cost by at least 600 crores so that cheaper power is made available to the consumers. The Company on the contrary has been claiming increase of 600 crores in the project cost in the name of increase in the capacity.

In the background of the district in-charge Minister Dr VS Acharya's press statement that the State has released Rs 583 crores to the company, the basis of such release of funds becomes highly questionable. While the State is virtually being blackmailed in the name of power shortage large scale embezzlement of State funds on account of this project cannot be ruled out, he alleged.

Samithi demanded the authorities including the Governor and the Judiciary to take the matter suo-motto to get to the bottom of the issue and punish the culprits.