Punjab terminates pact with GVK thermal plant

Subsequently, the Punjab State Power Corporation Ltd (PSPCL) has issued termination notice to the company.

A preliminary default notice was served by the PSPCL to GVK for cancellation of PPA due to high power cost.

An official statement quoting Channi said this step had been taken to safeguard the interest of consumers by way of reducing the burden of costly power.

A spokesperson for the Chief Minister's Office said the basic premise of entering into the PPA by GVK with the PSPCL was to provide cheaper power. GVK had been generating energy by arranging coal from the Coal India Ltd under SHAKTI Policy.

As per the PPA, GVK was required to arrange a captive coal mine but it failed to do so, even after the lapse of more than five years of synchronization with the grid, he added.

The spokesman said the capacity charges are being decided by Punjab State Electricity Regulatory Commission (PSERC) based on capital cost of around Rs 3,058 crore, which is equivalent to about Rs 1.61 per unit of fixed cost.

Going against this decision, the spokesperson said GVK had moved to the Appellate Tribunal for Electricity (APTEL) for claiming higher fixed cost to the tune of Rs 2.50 per unit based on claims of capital cost of about Rs 4,400 crore which is pending adjudication.

As per claims made by GVK, the spokesman pointed out that variable cost is around Rs 4.50 per unit and fixed cost is around Rs 2.50 per unit. Thus, the total claim of GVK under tariff comes out around Rs 7 per unit that increased further due to surrender of its costly power.