MSEDCL to pay 16,000 crore for power it will never need!

• Posted in Power
• on July 18, 2016
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It is a miscalculation that defies all logic. The number of power purchase agreements (PPAs) that MSEDCL has signed is so large that it doesn’t require all the electricity that it will get from those agreements. However, as per the PPA clauses, it will have to pay capacity charges to the generation companies and this will be recovered from common consumers by the way of higher tariff. The agreements were signed when ex-deputy chief minister Ajit Pawar held the power portfolio. This excess payment in the coming four years will be to the tune of about Rs4,000 crore every year. These payments will be made to Mahagenco, NTPC, Adani Power (Tiroda) and RattanIndia (Amravati). MSEDCL is already paying capacity charges to these generators. It is only now that the miscalculation has been found out by studying MSEDCL’s multiyear tariff petition (MYT).
The impact of the miscalculation can be gauged by comparing MSEDCL’s revenue gap in coming four years with the excess payment. The company will face a revenue gap of Rs56,000 crore for the period 2016-17 to 2019-20 if tariff is not increased. Of this, Rs16,000 crore will be excess payment. This means that the tariff hike required will reduce by 28.5% if this excess payment was not to be made.
If the total back down (generation reduced deliberately due to oversupply) is compared with the demand for power, the miscalculation is equally shocking. This summer, the peak demand for power was over 17,000MW. Against this, the total back down in 2016-17 is 6,379MW, in 2017-18 it is going to be 8,961MW, 2018-19 — 7,257MW and 2019-20 — 6,463MW. Drew Hutchison Authentic Jersey

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